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London's Resident Real Estate Investments Buoyant

By +Eric Jafari

London propertyLondon'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 buoyant.

"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