Innovative new research from Cluttons

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With London retaining its position as the most attractive international investment destination for Middle East investors, Cluttons’ latest research report has identified East Dulwich, Greenwich, Canada Water, Maida Vale and Hammersmith as upcoming residential hotspots, likely to offer the highest rental returns for prospective investors.

Conducted in partnership with the Consumer Data Research Centre and University College London, Cluttons’ unique research, ‘Residential Mobility in London: Unlocking Migration Patterns’, has been carried out using spatial interaction modelling. It examines flows of people over time and gives a novel insight into the push and pull factors of London’s various residential areas, highlighting the factors that most influence the attractiveness of an area to residents and, in turn, investors.

Commenting on the findings of the research, Faisal Durrani, Partner and Head of Research at Cluttons said, “The top five hotspots identified are most likely to attract investments and residential migrants, not least due to their relative affordability, compared to prime Central London locations. The desirability of Maida Vale, in particular, as a location for habitation appears to have spiked in recent years due to its perceived value for money, when compared to nearby Marylebone, or Hyde Park, where average prices have risen by 180% in the last 20 years to hover at roughly $3.1 million today.”

The strength of the US dollar, to which a range of Gulf currencies have historically retained a fixed peg, has positively positioned property assets in London, creating a strong appetite for a London-based investment. “London remains the most preferred location for investment amongst Middle East Family offices owing to factors like close trading links that date back to the 1800’s, around 39 direct daily flights from the Gulf, and a 175% rise in capital value in the last 20 years. For Middle East investors, the circa 15% to 18% decline in the value of sterling since just before the Brexit referendum has aided London’s appeal. This trend is likely to continue into 2018,” explained Durrani.

The report also discusses the decisions taken by many Londoners, who forego home ownership, albeit temporarily, in order to access a certain lifestyle, or to achieve what is perceived to be an optimal commute. “This trend contributes to increasing the population density in many prime Central London locations where accessibility levels are high due to the high concentration of Tube stops, adding to the opportunities for strong rental returns,” added Durrani.