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Financial Sector Improves East London Real Estate

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RICS  Royal Institute of Chartered Surveyors  London  Simon Rubinsohn  Canary Wharf  residential real estate  Katy Warrick 

Financial Sector Improves East London Real Estate

By - Friday 05 August 2011

Investors are being drawn to residential real estate in the east of London due in part to strong occupancy levels among those working in the financial services sector. This is according to Savills, which noted that there has been an upward pressure on capital values and rents during the second quarter of the year.

And a significant annual rise in house prices of 11.6 per cent has also been recorded, with rents following the same pattern. However, investors may be keen to keep hold of their assets rather than sell them as Savills predicted that rental growth will outstrip the underlying value of properties over the next five years. The firm believes tenants will see a 38.9 per cent hike in rents over the period, while vendors can expect 31 per cent more for their house or flat.

Katy Warrick, of Savills London residential research, commented: "The presence of investors in the market, attracted by a strong outlook for rental demand and income, has contributed to price recovery." She went on to explain that these positive estimations are due to a number of factors, including a lack of new-build supply, improved employment figures in the financial and business services sectors and high house prices - which are pushing owner-occupiers out of the market.

And it is not only residential real estate that could perform well over the coming years, with chief economist at the Royal Institution of Chartered Surveyors Simon Rubinsohn noting that a shortage of office space in prime locations could result in firms looking for accommodation in other districts of the city. "What you might see is some sort of ripple-out beyond the centre. We are seeing some trends in greater London offices to reflect that," he commented.

Investors looking at residential assets in the Canary Wharf or Wapping districts may therefore want to research some of the neighbouring areas to find out more about opportunities for commercial property investment elsewhere in London.
 

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