The Real Estate Of London With The Eyes Of Large Finance Companies

CBRE’s International Corporation, one of the world’s largest companies in the field of real estate, predicts the reduction in the volume of transactions and the deceleration of price growth in the UK real estate as a result of the tightening of mortgage conditions and prospects of higher interest rates. But the steady growth of the economy and recent developments relating to stamp duty, must balance these trends. Stable domestic demand and a shortage of supply are regarded to as key factors underlying the rise in prices. The research team sees no reason to worry after May elections, hinting there are no serious prerequisites for drastic changes.

Taking this all into account, CBRE’s predicts a rise in prices for UK property by 25% over the next five years (starting with the growth of 6% per year approximately), and London will remain the leader in terms of pricing growth with approximately 31% growth. Outside the capital, according to CBRE’s, the strongest and most promising markets will be the Southeast, Southwest and East of England.

Property prices in London in 2020 will be at about 80% above their peak before the financial crisis, forecasts BNP Paribas – a European leader in global banking and financial services company. In London, according to calculations of BNP Paribas, prices will rise this year by 10% due to the favorable situation in the sphere of business and financial services. But in the period of 2016-2019 years the growth rate will slow down to somewhat 6.2% annually (7.6% per year in the whole of the UK over the next four years). The expenses associated with acquiring real estate will grow with an increase in legal services – conveyancing solicitors services are going to surge by 10% during the next 5 years.

An important role in the growth of prices on the London real estate experts give foreign investors – increasing their activity is due to the unfavorable political and economic factors in the homeland. For example, a slowdown in China’s economy and the weakening of the yuan is likely to lead to market UK property investors in this new country. The top market segment with objects worth more than £ 5 million is likely to be reduced by the declining demand and growing supply. There is a certain risk that in this sector though, as foreign investors may start selling their facilities which are under construction yet.

Despite the marked decline in the first half of market activity in 2017, property values ​​in real terms throughout the country ‘has maintained its growth rate at zero inflation’, – state BNP Paribas analysts. In the long term increase in interest rates on loans in the near future housing will be less affordable.

The negative scenario, which is also considering BNP Paribas, may lie in the fact that foreign investors have bought property for the construction phase will be exhibited for sale again due to changes in the financial plans of their respective owners. This development brings additional risks for developers. But BNP Paribas analysts believe such a scenario is not likely to happen: London property has never been an object for short-term speculation, and was seen as a medium-term investment. In addition, declining an offer to investors is an important factor in favor of buying long term.

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