International demand for UK property investment set to intensify
A global supply shortage could drive up prices in prime property locations such as London City and Docklands a new report has found. The report by PWC and the Urban Land Institute (ULI) found that large amounts of capital were looking for a home in the global property market and with a shortage in the supply of property in more traditional prime property locations, many investors were accepting greater risk in the search for high yield ventures.
The perception that many properties in prime locations were overpriced has also contributed to an increase in demand for properties in more affordable locations such as Birmingham and Dublin. The value of global property trading in 2014 was estimated to be £700 billion, up 18% on 2013, while European sales were up 21% to £267 billion. Europe in particular showed signs of supply shortage with prices rising sharply across the board, according to Lisette Van Doorn, ULI European chief executive, the increase in activity for 2014 in Europe was down to plentiful capital supplies rather than “the underlying fundamentals”.
Capital seems to be in plentiful supply in the UK also, with residential property trading in the UK at its highest levels since 2007. With massive international interest in the UK property market as a whole, there is little sign that activity will abate over the course of 2015, and with the announcement by the ECB that it will commence quantitative easing in March, the supply of capital looks like it will increase further.
It is perhaps too early to accurately predict what affect quantitative easing in Europe will have on demand for property in the UK. However, given the huge demand that already exists for both commercial and residential property in the UK, from domestic and international investors, it is unlikely that the trillion Euro which will be pumped into the Eurozone will have no affect at all. On the contrary it is likely that demand from Europe will intensify competition in the UK property markets, particularly in urban areas with sought after prime property districts.