Is Investing in London Real Estate in 2020, 2021 And Beyond a Good Idea?

Is Investing in London Real Estate in 2020, 2021 And Beyond a Good Idea?

updated November 4, 2020
Is Investing in London Real Estate in 2020, 2021 And Beyond a Good Idea?

What a tumultuous year! With COVID-19, Brexit and a variety of other economic challenges over the last several months, you might be thinking about the where is best to invest your money. You might also be asking yourself: Is investing in real estate a good idea in London in 2020, 2021 and beyond?

One of the perennial advantages of real estate investment in London is the diversity of opportunities available. Plus, even in downtimes, there is always ample liquidity: in short, there are always buyers ready to buy! Especially with a low-interest rate regime likely to continue for some time—not to mention the current tax breaks on stamp duty.

So, no matter the economic or political climate, real estate investment in London in 2020, 2021 and beyond is likely to remain a top choice for a myriad of real estate investors.

Why? Well, read on…

10 reasons why investors are attracted to real estate investment in London

1) London and the UK has a reputation as a safe haven for investment. Domestic and foreign investors, including many sovereign funds from Asia and the Middle East, have always been attracted to real estate investment in the capital. They recognise and value the city’s economic and financial stability.

In 2019, year-end investment estimates showed around £11 billion in transactions for Central London offices, with capital from the Middle East and the Far East accounting for a major portion of this; 

2) The London commercial market has strong occupational market fundamentals and property assets are relatively highly liquid. Even in bad times, there are domestic or international buyers for quality properties;

3) The recent strengthening of the GBP against the Euro and USD means now is a good time for overseas investors to increase their holdings before the GBP strengthens further;

4) Being a global financial centre, funding for commercial property transactions is usually readily available from competing entities keen to lend into the market;

5) The United Kingdom real estate market is a very transparent and relatively easy to understand market. It is ranked as the most transparent market globally by JLL;

6) The institutional nature of the London office market has created an investment market geared to the investor;

7) Investment in London real estate offers an investor a relatively friendly regulatory framework and tax regime. There are no barriers to real estate ownership and/or the transfer of funds in and out of the country;

8) Real estate investment in London offers a guarantee of title which is especially valued by overseas investors. Freehold is preferred, although more experienced overseas investors are also comfortable with the long-leasehold structure of some London real estate;

9) London has an excellent infrastructure, financial and physical security, as well as many renowned educational establishments and an abundance of talent in a workforce with origins from all over the world;

10) Best of all, as smart or well-informed investors will tell you, quality properties in London consistently appreciate in value over time.

Is it worth investing in the UK real estate market right now?

Despite all of the above, excellent reasons to invest in real estate in London, people still ask:

“Is real estate a good investment in 2020?” Or, “Why invest in real estate now?”

For long-term investors, history has always shown that the best time to buy is in the midst of economic downturns when the commercial market has plateaued or is showing signs of some recovery. Indeed, it’s well known that, in challenging times, investing in London real estate always comes to the fore as one of the primary choices. After all, financial institutions, pension funds and sovereign wealth funds still need to invest in real estate to get their returns. Additionally;

  • Property investments can produce a stable income stream, hence real estate investing tends to offer predictability in a recession or stagnant economy. Prices of assets may drop but rents from properties let on long-term FRI leases are locked in;
  • Real estate may be less sensitive to volatility. If stock prices are swinging wildly, this will directly affect the return profile of a portfolio. Real estate’s relative low correlation to stock market movements, on the other hand, can make such investment a more reliable choice during a recession;
  • Returns from property may outperform stocks if the economy moves towards a full recession and stocks falter because of earnings or other concerns.

Is 2021 a good year to invest in real estate?

As with every investment, there is always a risk and it is important that you seek independent financial advice before making any investment. Whilst there are a number of very attractive real estate deals to have now, the expectation is that the volume of transactions, and hence opportunities, will increase in 2021. Some owners will be more willing to sell, and some will have to sell.

For a commercial property developer, to buy in a recession, when opportunities are plentiful, is ideal. Timing of the development of new properties to market will be just right to catch the cyclical upturn in the London market.

Commercial property investment bonds are a great way to take advantage of being an investor in the London market

For many people, investing in commercial property investment bonds is a great way to participate in the UK property market. Both for investors taking their first steps into the real estate market and more experienced investors.

Commercial property bonds can offer a variety of benefits:

1) The bond can be asset-backed. The Nao Bond is asset-backed with London commercial property;

2) Fixed interest rates. The Nao Bond offers 8.25% fixed returns for investors.

3) Bonds offer a fixed maturity period. The Nao Bond is a 5-year investment with a possible 3-year redemption period to accommodate a shorter investment strategy;

4) Property investment bonds are one of the best and most affordable ways to capitalise on a developer’s property experience, knowledge and efforts, leaving the investor stress free – only being required to collect interest payments!

5)  Bonds can be tradable. The Nao Bond is listed on the Dublin Stock Exchange so is tradable.

A rewarding real estate investment in London

Investing in London real estate can be very rewarding whether you make a decision to invest in 2020, 2021 or beyond. If you want to invest in commercial property in the UK, all you need to do is make sure you decide on the right way to get started.

Investing in commercial real estate bonds offers an opportunity to get involved in the London commercial property market without the worry of development-related hassles.

Nao Group has a long history of development projects in London, offering both corporate and individual clients the opportunity to invest in commercial property investment bonds.

So, if you’re looking for great asset-backed investments into commercial spaces in London and are interested in learning more about Nao’s property investment bonds you can read more about us.

 

 

Always seek independent financial advice before making any financial decisions.