Five reasons why now is the time to invest in London and European property

The past year has torn up the rulebook on so many aspects of life, and the luxury property market is certainly no exception. For anyone seeking to invest in London or Europe, taking a moment to assess the impact of the pandemic is vital in planning how to move ahead. What’s apparent, though, is that there are definite reasons to be positive. Here are five reasons why now is a good time to consider a turnkey investment property in London or Europe.

1. Property prices are set to rise

We’ve seen from our existing clients that there is a pent-up demand for property both in London and Europe. This is particularly true in the prime luxury market, where after a strong start at the start of 2020 and the inevitable dip in the second quarter, sales are once again increasing. Savills has even revised its prime property price forecast, as a result, stating prime central London prices are expected to grow 17.5% between 2020 and 2024. It’s likely we’ll have to wait until the end of 2021 and into 2022 before a stronger recovery in values takes hold. But this offers time to find the right property investment and get a project underway before prices really start to rise.

2. There are bargains to be found with local knowledge on your side

In our experience, your chances of maximising a return on a property investment will depend on having a partner who is working for you and looking after your interests. Property markets can change drastically from one neighbourhood to the next, and choosing the right one will make all the difference in securing your desired return. We were interested to read that the Coutts London Prime Property Index pointed to a 23% price drop in Knightsbridge and Belgravia, and a 19% drop in Bayswater and Maida Vale from their heights six years ago. These prices will rise as demand grows, so now is the time to take advantage of these lows. This could particularly be a good opportunity for overseas investors who could benefit from any weakness in sterling. Once again, though, this makes it even more crucial to have a team on the ground who can conduct feasibility studies and advise not only when and where to buy, but also how to maximise the prospective investment.

3. Interest rates are at a historic low

In its EMEA Real Estate Market Outlook report, CBRE stated that it didn’t expect short-term interest rates to rise until 2023. The ECB tends to keep interest rates artificially low. For example, on 25 July 2019, it decided to keep them unchanged at 0.00%, 0.25% and -0.40% for as long as necessary. In this kind of financial market, investors shy from buying stocks as they are volatile, and bonds are expensive considering yields are still hovering around very low levels. Therefore, property offers a potential return that other assets can’t. There is a huge availability of finance available for prime real estate transactions. These go all the way from residential owner occupier mortgages through to stretched senior debt, mezzanine and equity interest rates; they’re at an all-time low and the amount that can be borrowed against the right properties can be very high. If all of this is coupled with the already mentioned pent-up demand for prime European property, it’s clearly a good time to invest in real estate, as Nicolas Roux illustrates. “We are seeing strong demand from our overseas clients who want to take advantage of the current market conditions and weak sterling.”

4. Europe is at the forefront of the new wellness trend

We’ve observed amongst our clients that wellness is increasingly a key focus and they’re prepared to invest time and money in their own wellbeing. Buyers of prime property are following this trend too, and European cities are perfectly placed to offer the sense of wellbeing they’re looking for. In the Knight Frank index of cities that enabled their inhabitants to achieve a higher sense of wellbeing, 14 of the top 25 were in Europe, seven in the top 10. Oslo, Helsinki and Zurich lead the field, with London at number 24. The company rated the cities on eight key categories – green space, annual hours of sunshine, traffic congestion, happiness, quality of healthcare, work-life balance and governance – in order to discern which places were winning on the wellbeing front. It seems that investing in certain European cities easily chimes with the requirements of UHNW property buyers.

5. London property offers the potential that buyers crave

We’ve long advised investors that the key ways to add value to property are to add internal space and improve the function of the property for future buyers. This has never been more true, as people today desire a sense of space. The Knight Frank Global Buyer Survey took the views of over 700 clients across 44 countries to find out what they want from a property post Covid-19. Some 45% said they are more likely to buy a detached family home than they were before Covid-19, with 66% saying large gardens are more important. London is well supplied with luxury properties that offer both the scope for improvements, such as generous home offices, and the gardens that buyers are craving. For example, areas such as Notting Hill, Belgravia and Hampstead remain great postcodes to invest in because they offer more outdoor space and greenery. “We are currently revisiting a project in the middle of Mayfair where the client wants to include a roof terrace. It’s significant that this wasn’t even a consideration 12 months ago,” says Nicolas.

At Rive Gauche we source property with value-added potential for international investors. Nicolas Roux and team will not only work with their trusted partners to source a property that meets your requirements but conduct a feasibility study to understand its potential before you invest. If you are looking for a project that will offer maximum return, please contact us to find out more about our complete turnkey investment service.