The case for commuter belt property
As transport links improve and London expands, the commuter belt zone changes: its boundaries are fluid. With these changes, come great investment potential.
Two strong forces act upon the housing market in central London. The first is the fact that London cannot house its growing population. London needs 64,000 new homes a year according to Savills, but the GLA reports just 27,800 were built in 2015. Meanwhile, new house-building has stayed at around 25,000 a year for over 30 years, as documented in the Mayor of London’s 2014 Housing Strategy.
The second force is that of international investment. London is a financial capital of the world; its laws are globally trusted, and it’s internationally viewed as a safe haven for money. The result has been a large amount of foreign investment into property in recent years, meaning that Londoners compete not just with each other, but with the world. According to a Knight Frank study in 2013, 49 per cent of all prime central London buyers were non-British citizens, while 28 per cent did not even live in the UK: their purchases were for occasional use or investment. Prices in prime London were pushed beyond the reach of all but the extremely wealthy.
These two factors are pushing an increasing number of people out of the capital, either because they simply cannot afford it, or because they’re looking for more space and greater value for money. This value migration pushes up capital and rental values in these areas, and offers attractive opportunities to investors. Savills identify three ‘major wealth corridors’ that many commuters have tended to move out across:
- South-West following the Thames into Surrey and Berkshire
- North via Hampstead into Hertfordshire
- South-East from Dulwich into Kent
The number of commuters buying in these areas is growing. 26% of sales in the ‘major wealth corridors’ were to commuters in 2014, up from 21% the previous year. Strong growth prospects have followed this increase in sales. Savills predict the ‘Suburban’, ‘Inner Commute’, and ‘Outer Commute’ areas of London to have the highest growth of anywhere in the UK, during the five years from 2016 – 2020. They forecast 24.5%, 24.0%, and 23.4% growth for these areas respectively.
Transport infrastructural investments are also having an impact. Commuter belt areas are becoming more attractive thanks to the prospect of shortened journey times, better rolling stock and smarter stations. Aside from Crossrail (another of our property themes), projects such as HS2, the Bakerloo line extension, Crossrail 2, the Overground extension, the modernisation of Thameslink, and the new bridge at Thamesmead will all have a significant impact on relative areas. Savills has found that increasing density around the major transport corridors will prove vital in helping address the housing crisis in London.
Our property team carefully select institutional-grade properties in commuter belt areas, and make them available to you for investment. Take a look at the commuter belt properties currently available on our marketplace now: