Regeneration sites in East London hold potential for landlords and investors

The biggest house price increases in London in the next five years are expected to be in areas of regeneration in the outer and eastern boroughs, a new analysis suggests.

Sales prices of apartments in large regeneration projects have risen by an average of 17% between 2012 and 2016, more than double the 8% for non-regeneration flats in inner London, according to the research from Dataloft commissioned by developer Mount Anvil.

It also says that price growth potential in East London’s regeneration hotspots has outpaced the mature neighbourhoods of central London, with average prices in Newham growing steeply since 2012

The report suggests that as more areas, particularly in East London’s former industrial locations like Whitechapel, Royal Docks and Bow Creek, undergo investment and revival, there is opportunity for owner occupiers to purchase a home at a competitive price point, with the potential to benefit from price growth in the future.

It points out that as developers and local authorities continue to fund such transformations, they are delivering more than a collection of homes, but fully fledged lifestyle offerings underpinned by leisure, retail and enhanced infrastructure, creating further scope for capital growth.

‘A promising return on investment has, and always will, take precedence for landlords, but we have observed a fundamental shift in the mindset of owner occupiers in the past 18 months,’ said Jon Hall, sales director of Mount Anvil.

‘While location, design and asking prices remain key determinants of any purchase, capital growth potential has emerged as critical for owner occupiers, particularly in light of stamp duty costs, which can have an impact on budgets when looking for a new home,’ he added.

He pointed out that while there has been negative growth in some parts of the prime central London market, the city remains the epitome of solid real estate investment in the UK and he believes that attention is moving to the neglected and undiscovered districts in the East.

Even with Brexit uncertainty, London is still regarded as a world class city with a robust economy and offering real estate investment potential, according to Sandra Jones, managing director of Dataloft. ‘These fundamentals underwrite the value of its residential property market in the long term,’ she said.

‘The market is cyclical, and prices have been dampening in response to Brexit and stamp duty reform. The market has already adapted, and it is widely accepted that price adjustments have now fully absorbed the tax levies,’ she explained.

‘Developments in areas undergoing regeneration tend to outperform established areas throughout all stages of the property cycle and may provide some of the best opportunities for growth, even in a flat market,’ she pointed out.

‘Demand and supply indicators both point towards higher price growth returning once the uncertainty of Brexit has passed. Softer prices combined with political and economic stability continue to make London one of the top destinations for investment,’ she concluded.