As per the recently published CBRE 2021 EMEA Investor Intentions Survey, London has been proclaimed as the most attractive city for European real estate investment in 2021. In spite of the challenges experienced last year, the UK residential investment volumes matched 2018’s all-time high reaching as much as £6.1 billion. What’s more, £2.8 billion of which targeted the London market, singularly securing nearly half of all the investment activity within the UK and achieving yields of 4.4% in the fourth quarter.
Following the market’s success, it has been commented that the UK’s residential property is a solid investment option. In an era of a burgeoning build-to-rent sector, the housing shortages have become more apparent as restrictions and the temporary SDLT suspension spurred many to relocate. As conveyancing transactions soared, this positive uplift in demand generated momentum from investors with many recognising the market as a fortuitous time to capitalise on property investment. In the fourth quarter transaction figures reached 351,000, the highest quarterly figure since the global financial crisis, second only to the first quarter of 2016 when it reached 387,000 ahead of second home stamp duty changes introduced in April that year. During this time there were also 307,000 mortgage approvals, with an average mortgage size of £211,119. The recently incited extension of the stamp duty holiday, albeit with staggered increases, until October means that this level of activity will be sustained throughout 2021.
According to CBRE’s 2021 EMEA Investor Intentions Survey, a majority of almost 60% of respondents expected to buy more real estate in 2021 than last year. Rationale for this is likely to involve the increase in market sentiment and investor confidence with the NHS on track to vaccinate half of the UK’s adult population by the end of this month. Furthermore, the survey indicated that over 80% of the participating UK investors intend to deploy more capital this year.
The managing director of EMEA capital markets at CBRE, commented that the global search for yield continues as more investors look towards the potential of the real estate sector as appetite for foreign investments is set to benefit prominent European cities. Further adding, the newfound certainty surrounding the Brexit situation has changed the mindset of nervous investors and inspired a renewed confidence into the London market, where CBRE have stated they expect to see a significant volume of European capital deployed over the next 12 months.
In the Schroders’ Global Cities Index report which was published last year, London was once again named top city in the world for investment. The UK capital has long been renowned for its high-performing residential, social, environmental and commercial sectors, a quality which was not overshadowed even in the depths of a public crisis last year. The co-head of Global Cities at Schroders commented that London’s retention of first place was an unsurprising feat, the city’s ability to attract multi-national companies, highly skilled talent and generate innovation remains ever-more attractive to investors and prospective investors alike.