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39: London Olympics - hot spots to invest in

PropertyInvesting.net

London won the Olympic bid, narrowing beating Paris the favourites. This will create a huge boost to the London economy up to 2012 and help to completely regenerate the Lower Leas Valley – an area of desolate industrial land at present between Leytonstone and Canning Town, with its centre at Stratford and just east of Hackney Wick. The whole London economy is likely to be boosted by an average of some 0.2% GDP per annum. Tens of thousands of jobs will be created. Owners of property in the Stratford East London area apparently immediately pulled their property off the market after the bid was announced – in anticipation of future price increases. The bid, along with the introduction of UK-REITs should stimulate property investment in the area and lead almost undoubtedly to property price increases in the area. The boost to general infra-structure investment with faster progress and concrete timelines to projects such as the East London Line Extension, DHL upgrade and extension and possibly Crossrail will also boost property prices. Areas most impacted by the Olympic bid in order of priority are:

1. Stratford, Maryland, Plaistow, Hackney Wick, Canning Town, Silvertown, Bow Church, Bow, Forest Gate, West Ham, Leytonstone, Hackney, Kings Cross, Canary Warf, Beckton
2. Bethnal Green, Shoreditch, New Cross, North Greenwich, Woolwich, North Woolwich, Ilford, Barking, Dagenham
3. Northfleet/Gravesend, London City and Midtown, Tilbury
4. London (rest of) and South East

Also expect high quality West End locations to benefit with the influx of investment from the Far East, Middle East and USA – examples include Mayfair, Soho, Hatten Garden, Bayswater, Edgware.

Also note that the London GDP is growing at 4% at present, with retail spending up – and services growth strong. There are early signs that in some areas, house prices have started to move up, particularly in the West End. So London should be a safe bet for the foreseeable future – in part because of high immigration of all nationalities, buoyant banking/services and a flood of Middle Eastern and Far Eastern money entering the country from these regions that are growing strongly. Remember, it’s a global centre – you just have to walk the streets to notice. And the middle to lower rental market is strong –with young people looking for accommodation. As discussed before, be careful in the north and Midland where cities economies are more reliant on manufacturing – much of which will move to India and China over time (labour costs being 10-20 times cheaper).

London Regenerating Areas (in any case, even without the Olympics)

Consistent with the services theme – it’s best to try and location regenerating areas that have improving communications/infra-structure, whilst benefiting from banking/services related economic development – both in the UK and other countries. I’ll make a note of some examples where strong higher-wage jobs growth is expected:

Silvertown – Becton – North Woolwich – new DLR and very close to massively expanding Dockland offices/banking/media
Stratford/Leytonstone/Hackney Wick – proximity to Eurostar station and excellent tube/rail communications – close to both the City and Docklands
Limehouse – midway between the City and Docklands – on prime part of the Thames with boating centre (Chelsea harbour of the east)
Wembley – new stadium and leisure/retail complex
North Greenwich – new housing and plans for the Dome
Woolwich – new DHL arrives 2008 for fast communications to Docklands and City Airport – many banking staff will move there
Battersea – power station development area providing 7000 extra jobs, regenerating area just south of Chelsea and very close to West End
Elephant & Castle – equidistant to West End, Midtown and City in a depressed but regenerating area – has to improve! (also consider northern Walworth and south fringe of Borough as close to London Bridge as possible)
Blackfriars and Tottenham Court Road – could be the best place in London for communications if Crossrail is built
Kings Cross – massive regeneration because of new Eurostar station – on the NE fringe is still good value
Soho – bang in the city centre – much Chinese money, smartening up, loosing its original character but looking more like Mayfair by the day!
Bayswater – has been coming up for years and now quite expensive, but still some way to go being between its more desirable Notting Hill and Mayfair neighbours

These are my hot London areas for the next 5-10 years. Also, anywhere along the East London Line extension close to future tube stations has to be a wise area to consider – examples:

Peckham Rye
New Cross Gate
Brockley
Sydenham
Honor Oak
Nunhead
Peckham
East Dulwich
Forest Hill
Ladywell
Abbey Wood
East Croydon
Hackney
Sommerton
Woolwich

In summary – it’s very difficult to see how price will not rise in Hackney Wick, Stratford, and Kings Cross. Best get in early but avoid excessive competition if you can.
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Regards