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London named world’s top City of Opportunity as SE8 revealed as new Greater London property hotspot
May 29, 2014Article by Ray Withers
London has been named the world’s top City of Opportunity by global finance giant Pricewaterhouse Cooper (PwC), one of the Big Four auditors (along with Deloitte, Ernst and Young and KPMG).
According to the Cities of Opportunity 6 report, London is the only city of 30 to finish in the top three of 10 categories – economic clout, city gateway and technology readiness – beating runners up New York and Singapore to the top position for the first time. In the last report, London finished just “a hair’s breadth (less than a tenth of one per cent) behind New York” in a virtual tie.
Bob Moritz, chairman and senior partner at PwC, comments: “Cities are increasingly competing for talent and are working hard to capture the promise of growth from the many opportunities in today’s rapidly changing world. As a result, people are looking for more potential for personal opportunity while demanding critical elements to increase quality of life. It’s the top ranking cities in this year’s study that are demonstrating the foresight that is needed to adapt, stay competitive and thrive for a sustainable positive future.”
UK economy tipped to be top in Europe by 2030
London has always been a high performer, embodying the energy, opportunity and hope which draw people to city life. Thanks to a rising population, low tax regime and insulation from the problems in the Eurozone, the UK economy is now being tipped to be Europe’s leading economy by 2030. Growth in 2014 is estimated at 2.7% – the fastest pace in seven years.
A massive 70% of this growth is said to come from household or property-related consumption. This is not surprising considering London continues to lead the nationwide market recovery. London has been outperforming the rest of the UK since the mid noughties, with property prices now more than double the UK level – which is higher than the previous peaks in 1987 and 2001.
Half-a-million property prices up 26% year on year
The latest data from independent agent haart, shows average London property prices are up over 26% year on year. The average London property price is said to have reached £501,056, up 26.1% annually and 4.3% per month. This is a huge curve compared to the rest of the UK, with values as a whole up 9.4% year on year and 2.1% month on month. Recent data from Nationwide shows the annual growth even higher at 10.9% (from April 2013 to April 2014).
Paul Smith, chief executive officer of haart, says: “London home owners have seen an average £100,000 increase in equity over the last 12 months. In spite of London property prices breaking new records of over £50,000, buyers are still coming to the market in numbers greater than last year.”
Smith also dismissed fears of a housing bubble, echoing the latest property market report from Savills, which says fears of a bubble are a characteristic and almost inevitable part of a recovery cycle.
Fears of a bubble misplaced as London boom sees the greater city areas benefit
The Savills report states: “The mechanisms of an apparent boom at the beginning of housing market recovery are simple and almost inevitable: as optimism returns so the potential buyer numbers rise, but vendors remain thin on the ground because they are waiting for prices to rise. This instant supply-demand mismatch makes competitive bidding and apparent ‘boom’ conditions inevitable at the start of every cycle.”
In the past couple of years, the London property boom has led to a ripple effect of buyers moving out of central London to the surrounding commuter regions. London has a huge housing demand and a shortfall of 21,000 homes per annum. According to Hometrack, in 2013 demand rose 25%, the fastest rate in three years, but supply increased by only 6%, its slowest pace in 12 years. This has led to the London property trends spreading outwards.
According to Savills, greater London areas now look set to outperform the centre in price growth over the next four years, with a projected cumulative growth of 23% and greater London rents rising 25.8% over the same period to 2018.
Deptford tipped as “the new Shoreditch”
South East London is tipped to be the next area to watch, as boroughs with previous high growth such as Islington and Hackney, are now pricing many buyers out of the market. Analysts are predicting value growth of at least 20% (to 2018–2019) in Lewisham, as the borough becomes the next big commuter belt.
Ray Withers, CEO of Property Frontiers, explains: “As London grows, so it pushes out its wealth to the surrounding areas – particularly the south east. We’ve seen it happen in areas like Canary Wharf and Shoreditch already and now Deptford is tipped to be the top choice. Boris Johnson called Deptford one of “London’s main opportunity areas” and it is a super-trendy hotspot right now, with more artists per square mile than anywhere else in the country. Rich with art galleries, cafes and boutique shops, Deptford is now attracting professionals and City bankers who want a fashionable postcode without the sky-high price tag.”
Certainly Deptford ticks all the right boxes. It has excellent transport links, with London Bridge 6 minutes away and both Canary Wharf and the City of London 15 minutes away. The area’s Convoy’s Wharf is undergoing a £1 billion regeneration scheme, designed to turn Deptford into “the new Shoreditch” and will see over 3,000 new jobs created.
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The regeneration development is said to be: “A fantastic opportunity for London and the local Deptford area. The development will create an attractive destination for visitors to this key area of London riverside and also help stimulate the local economy with new jobs, new homes and exciting retail, leisure and community facilities.”
Get in touch on +44 1865 202 700 to find out more about investing in Deptford and how you can gain up to 4.75% yields (higher than the London average of 3.43%).