Are the days of yield-hungry sheikhs and oligarchs pushing up London property prices numbered? Research from PwC and the Urban Land Institute found that property investors had cooled on the capital, ranking it as only the 15th best European city for prospects.
While London remains the biggest market for property investments, the Emerging Trends in Real Estate report indicates that investors aren’t so sure of rising yields there any more. On the surface, that isn’t too surprising – prices are so high already that it’s hard to see them rising by the same margins as, say, Birmingham, which came sixth on the list for the second year running.
What it doesn’t mean is that the 500 investors surveyed believe the market is going to plunge. ‘Money tends to plough into [London] during the harder times, as people are looking for a safe bet, somewhere to keep their money, and as prices go up and yields compress, people looking for better rewards will look to secondary cities,’ said PwC’s real estate Director Gareth Lewis.
‘That’s when you see cities like London slide out of the top 10. It’s not a long-term damning of the London market by any stretch of the imagination. It’s just a reflection of where we are in the cycle,’ he added.
So good if you're hoping for a robust economic recovery, not so much if you were hoping the cost of buying a flat or renting an office in the capital might go down at some point in the near future. Perhaps you should try Birmingham instead. It’s cheaper, the prospects are good and HSBC seems to like it...