With the ever increasing prices and a crunch in yields, London has missed out on being in the top 10 list for best cities in Europe for investment prospects for the first time in four years, coming in 15th place, according to reports by PwC and the Urban Land Institute.
The Emerging Trends in Real Estate report gives good guides into where experts think the market might be heading. Results are based off of a collection of interviews from over 500 developers, investors and property managers across Europe in both residential and commercial markets.
In a piece on in the Telegraph said that, despite London being one of the biggest investment markets for European property, it came one place below Istanbul and two below Budapest. The reason for this, according to investors, is that the market prices may have finally reached their peak.
Yield compression in the UK capital is either at an end or may tail off this year, some investors suggest.
Commenting on the findings, director of Real Estate at PwC, Gareth Lewis, said: “London is the largest real estate market in Europe.
“Money tends to plough into it during the harder times, as people are looking for a safe be, somewhere to keep their money, and as prices go up and yields compress, people looking for better rewards will look to secondary cities.”
Mr. Lewis advises that all is not lost forever, as he says “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.
One investor believes that the changing market, with Americans looking to deploy capital for more property in mainland Europe, will be a big test for London into how much of the stock is “mopped up”.
London’s neighbouring cousin Birmingham on the other hand managed to gain a spot in the top 10 list, coming at number six for the second year running. One investor said that employers and employees are being lured away from London and “At several buildings in Birmingham which we own, the tenants have moved people there because it is cheaper.”
We took an in-depth look into how Birmingham was voted the number one destination in the UK for investor interest.
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