Prime London Residential Property tops investment growth profile

Tue 18 Feb 2014

· Residential property in Prime London will be the best performing major asset type in terms of growth for 2014, beating FTSE 100 and gold

· Prime capital values rose by 3.4% in Q4 2013 and by 11.3% for 2013 as a whole

· Prime capital values are expected to rise 48.5% 2014-2018

· Investors increasingly attracted to the sector's low volatility and forecast strong capital growth

Residential property in Prime London will outperform other major asset types in terms of growth this year, according to Chestertons Humberts. The company's latest Index* has forecast capital values to rise 10.1%, compared with FTSE 100 Index** (+7.8%); gold** (+1.4%) and Brent Crude** (-3%) which will encourage investors to gravitate towards property over the next twelve months.

As the number of properties on the market remains low, house prices are expected to be driven up by sustained demand from foreign and domestic buyers. Overseas investors will continue to predominantly target apartments within new developments to add to their investment portfolios, whilst growing confidence that the economic recovery has taken hold will bring more domestic buyers to market.

In comparison, equities are expected to rise as corporate prospects begin to improve, but at a slower pace; gold, the ultimate safe haven faces greater uncertainty as global economies appear to stabilise; whilst oil prices are predicted to fall as demand declines from major importers.

Chestertons Humberts' Prime London Residential Sales Report 2013 Q4 demonstrates just how strong the property market became in 2013. According the company's Index, prime capital values rose just over 11% for 2013 as a whole, slightly higher than the previous year as the level of demand remained strong from buy-to-let investors and owner occupiers - both foreign and domestic. Meanwhile,appraisals, viewings and exchanges all recorded double digit growth compared to 2012. Chesterton Humberts is forecasting that residential property values will grow at a rate of 9.7% p.a in 2014, and 48.5% over the next five years.

Nick Barnes, head of research highlights the advantages of investing in residential property in Prime London:

"There is certainly a compelling case for investing in residential property in Prime London. Its long term track record is impressive, having delivered strong capital growth together with low volatility compared to equities and commodities whilst displaying low correlation with other mainstream asset classes. This has already attracted a wide range of prospective buyers."

He continues: "Looking ahead, demand is likely to continue to outstrip supply which will sustain capital growth whilst the private rented sector is forecast to expand further as the economy picks up and labour markets improve, thus providing more opportunity for steady rental income. Furthermore, with no further taxes proposed on high end property, bar capital gains on non resident owners, I expect demand from investors will continue to rise for the foreseeable future - assuming we do not see any unforeseen economic or financial shocks. Whilst it is less liquid than equities and commodities, it is an ideal longer term investment portfolio balancer."