London retained its title as tourist capital of the world this week. With capital and rental growth prospects looking good, it’s world-beating in its ability to offer opportunities for property investors to bank profits too.
With Crossrail just three years away, infrastructure investment is fuelling returns. It helps too that the world’s most exciting tenants want to grow their footprints in London. This week alone, Twitter and Asos are launching two of the West End’s largest office requirements to accommodate major business expansion plans.
European Land is among those looking to profit in this welcoming climate. The Jarvis and Reuben brothers are seeking to cash in on the appetite for development opportunities and are reviewing 1, 2 and 6 Merchant Square in Paddington, W2. A £250m sale is likely. And with an attractive mix of residential and offices in the mix, they’ll do well.
Others, who have seen the market move significantly since acquisition, are poised too. Especially those with long delivery times. A deal now would give them flexibility, and a canny reputation if the cycle ends more quickly than many expect. The wisest will seek overage payments on profits over a certain level to catch some of the upside should the market outperform too.
It all contributes to a city whose pace of change shows no signs of slowing. You will soon be able to jump on a Crossrail train from Paddington and alight near Silvertown Quays, another of the capital’s most exciting mega masterplans.
And it will also fuel discussion at next week’s London Real Estate Forum; and nowhere more so than at EG’s latest Global Real Estate debate there on Thursday morning. We will hold similar debates in continental Europe, north America and Asia over the coming months. It will be interesting to see how they measure up against London. They’ll have to go some way to match it.
• For many, the biggest risk to the capital’s success is its housing market. Unaffordable to too many people, it is a problem in dire need of a solution. Targets have been set, commitments pronounced and fingers crossed. But there has been little detail as to how the gaps between need and supply – and cost of delivery versus cost of ownership – might be narrowed.
Prospective London mayor David Lammy – Paddy Power will give you 8/1 on his chances – has a bold plan: a £10bn Homes for London agency funded through the bond markets. The Labour MP for Tottenham tells EG this week that the scale of the housing crisis requires state intervention, and that the bond markets offer the most attractive means of financing it.
He is correct in his assessment that the scale of the problem is such that it is beyond (and certainly not the sole responsibility of) the private sector. Whether or not he is right in the financial solution he has landed upon, it is encouraging to hear radical thinking.
• The auctions market is back with a post-election bang. Allsop raised £90m from its latest sale, the UK’s biggest residential auction held on a single day. Others – including Andrew Scott Robertson, Strettons and Savills – have all reported strong post-election performances. Auctioneers staging sales in the coming weeks – including Clive Emson and Acuitus – are brimming with confidence. If the auction room remains an early-stage indicator for the wider market, we can all feel confident.
• With so much confidence around, thoughts should turn to how to ensure all this activity, creativity and delivery is recognised and celebrated. EG can help. The deadline for both the EG Awards and the MIPIM UK Awards is looming. We have four Deal of the Year categories across both awards, so you are sure to find one that suits.
Propcos and advisers will find no shortage of categories in the EG Awards to celebrate their successes, while projects will find a home in the MIPIM UK Awards. Investors, rising stars and even cities will also find categories that acknowledge their achievements. Enter now at www.estatesgazette.com/awards and www.mipimuk-awards.co.uk
