There is often much talk about where the next hotspot for property investment will be in London and the south-east of the capital is certainly one to keep an eye on over the next few years. With new developments in the area, as well as the extension of the Crossrail line, there are compelling arguments to consider buying real estate in this part of the city. Head of residential research at Jones Lang LaSalle Jon Neale noted this region of the capital "has been a bit undervalued in the past", in comparison to the rest of London, adding: "There is a lot of potential out there for investors."
Crossrail is often cited as one of the major factors that will boost property markets in districts directly affected by the new line, as it will improve accessibility to these areas, making them more attractive to commuters and businesses alike. In the south-east of London, Plumstead and Abbey Wood are set to benefit directly from the new transport network, with the station at the latter location due to be the terminus for the south-east section of the Crossrail route. Mr Neale believes the rail link is likely to have a positive effect on the area, stressing having connections to Canary Wharf will make a difference, especially as there are set to be lines leading from here to the West End and Heathrow Airport.
He added the parts of Greenwich and Lewisham that are on the Docklands Light Railway will be able to access Canary Wharf within ten minutes, which all serves to "make the whole area more connected". While transport links are undoubtedly important when it comes to boosting the popularity of a particular location, there are other reasons to consider the south-east of London as an investment prospect.
As with much of the capital, new homes in the city are needed to meet surging demand, with a Knight Frank report naming Bexley and Bromley as two of the most undersupplied boroughs in London. According to the firm's estimates, only 17 per cent of the new homes required by 2020 will be constructed in Bexley under current plans, while in Bromley approximately 23 per cent of the properties needed are due to be built. "London is still hugely undersupplied and will remain so for the foreseeable future. For developers with access to cash in the capital, this offers a very attractive proposition," the organisation concluded.
Mr Neale highlighted Greenwich in particular as a district of south-east London to consider investing in, describing it as the "obvious area" to focus on because of its proximity to Canary Wharf and the infrastructure and transport connections available. "You have a lot of riverside schemes which are coming forward and you have got fantastic river views. You have also got the historic park there at Greenwich as well, so it gives it quite a different atmosphere to the rest of south-east London," he asserted.
There is evidence that new housing schemes in areas such as Greenwich are being snapped up by buyers. Managing director of Berkeley Homes Paul Vallone noted earlier this month that the properties on the company's Royal Arsenal Riverside development offered under the government-backed FirstBuy scheme had "proved to be extremely popular". He is optimistic about the prospects for the district, commenting: "This is an exciting time for Greenwich, which has recently been awarded Royal Borough status and is a host Olympic borough." Mr Vallone added the area is "really going places".
Elsewhere in south-east London, Lewisham Borough Council granted planning permission for a mixed-use development on Deptford High Street earlier this month, indicating further regeneration in the region is taking place. Mr Neale pointed to the potential in places such as Woolwich and Deptford, commenting the latter has a riverside location and "a lot of industrial heritage which is being developed".
From an investment perspective, there are several south-east London districts that are predicted to generate attractive returns this year. A report into the state of the UK's rental market published recently by Savills revealed total income from property in Greenwich is expected to exceed nine per cent, with between 50 and 55 per cent of this coming from rents. Other boroughs in the south-east of the capital that were highlighted by the organisation include Lewisham, where returns of between eight and 8.5 per cent are anticipated, and Bromley and Bexley, both of which are predicted to deliver between 7.5 and eight per cent returns.
- Tuesday 03 April 2012