Weekly Property Round Up
In this week's property update, Harry Edwards looks at the ever increasing property wealth bubble in London and the launch of a crowdfunding firm as a tool for investors to increase their property portfolio.
Mapped: House prices by London's Tube stops – £1m homes now reach Zone 6
London’s streets are not so much paved with gold as studded with diamonds. The property wealth bubble is so big that the capital has 58 Tube stations around which average property prices are now £1m or more. This is a five-fold increase since 2010 when there were just 11 stations in the £1m super-league.
These startling figures from Savills show there has been a huge leap in the number of property millionaires in just five years, and chart how wealth is trickling out of Zone One into Zones Two and Three, as high competition for homes or investments in the traditional stamping grounds of the rich have pushed people to look elsewhere.
They underline the fact that London’s underground network is the lifeblood of what is one of the most expensive property markets in the world. The property millionaire club has now reached Zone Six. The average house price in Moor Park is £1,605,714.
“It is sobering,” says Dominic Grace, head of residential development at Savills. “What it tells you is that a million pounds doesn’t buy you very much in London any more.”
Brief: Property Crowdfunding Firm A Piece of London launches
On Monday, new property crowdfunding firm, A Piece of London, launched. The idea is that they will allow clients to choose a property from its portfolio and invest through their online platform. Operating under FCA guidelines, the platform will manage the whole process of investing, managing and selling the property.
The firm’s focus on prime London properties is unique and are keen to help investors build a portfolio of prime properties. They operate a profit share which means they only make money from an investment if their investors do – an unusual model which they say “completely aligns their interests with their investors”.
With the first project already 30% funded and a second project at the iconic Battersea Power Station, they appear to have early traction. With forecasters, Savills, predicting house prices to rise by 25% over the next five years, this could be an attractive opportunity to own your own piece of London property.
The total equity raised in IPOs and secondary offerings by European property companies has hit €10bn so far this year.
By comparison, €12.5bn was raised over the whole of 2014 and €5.5bn in 2013, according to the European Public Real Estate Association (EPRA).
Real estate has made up a large share of capital raisings on European stock markets. Over 13% of the €57bn raised in all IPOs last year was for property companies, far higher than real estate’s 1.4% share of the FTSE European Equities Index.