By +Eric Jafari
London's residential property
market remains strong, with returns on investments
outperforming commercial real estate.
Residential real estate investments are continuing to outperform
commercial property, according to the latest analysis from one of
the leaders in worldwide critical business intelligence.
In its latest UK Annual Residential Index, IPD revealed that
returns from private rental sector portfolios now sit at 8.9 per
cent in 2012.
This is in stark comparison to the 2.7 per cent gathered by the
commercial property sector last year. Additionally, residential
property investments are also surpassing inflation, which saw a 3.1
per cent rise last year.
Central London is driving these positive figures, IPD noted,
with the area seeing returns of 10.1 per cent and Outer London
bringing in nine per cent. Phil Tily, managing director for IPD in
UK and Ireland explained that even though property performance
always mirrors the wider economy, residential investments remain
"The unique fiscal and demographic factors driving property
growth in the capital look unlikely to change in the near term, and
this continues to foster interest amongst investors in the build to
rent sector," he expanded. "There is growing activity in this part
of the market and IPD is firmly committed to assisting and
measuring the growth of the private rented sector, as investors
look to diversify and hedge against their expenses."
Mark Weedon, IPD's head of residential, added that at present
there seems to be little evidence which suggests the gap between
the capital and the regions will begin to close in 2013. The reason
for this, the expert highlighted, was because demand for
residential property in London remains very strong.
"While In London it has been possible to invest and achieve a
level of capital appreciation, as you venture outside of the
capital residential has become more of an income play, increasingly
reminiscent of wider commercial property performance," he
highlighted. "Investors are buying into the sector for an income
stream, not a purely capital play."
01 March 2013