PROPERTY | SPECIAL
LIGHT AT THE END OF THE TUNNEL? RUPERT SMITH OF COMPLETE RPI DISCUSSES THE IMPACT THAT THE CROSSRAIL INFRASTRUCTURE PROJECT IS GOING TO HAVE ON PROPERTY PRICES IN AND AROUND LONDON.
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elcome to my seventh article discussing the hot topic of strategic investment decisions. In addition, Crossrail residential property investment, letting, management and sale has the potential to reposition many locations that in the UK. Please take a look at the HK Golfer website to access are currently considered tertiary, unlocking their all back issues. dormant value. My name is Rupert Smith the founding Director of Aside from the actual improvements to the Complete Residential Property Investments Ltd (hereinafter transport network, Crossrail is also prompting a CRPI). We are a specialist property investment company offering a unique and raft of wider investment and development above results-orientated commercial approach to all elements of UK property investment. ground. There are extensive over-site plans for Like with all investments I am of the view that diversity is key and with residential many of the stations, based around the concept investment in the UK the same principles apply. Investing in a mixture of both capital of placemaking. Tottenham Court Road is a great growth and yield-driven opportunity is always wise in my view, utilising the yield example of an area that, despite its inherently play to service debt on the lesser yielding is a pragmatic approach. good position, has been overlooked historically Location, location, location is what we hear and when transport infrastructure and its property market has under-performed as a changes dramatically never a truer word be said, Crossrail is a prime example. result. Crossrail is Europe’s largest infrastructure project and its impact on London will H owever, there are now subs tantial be far reaching. It will cut journey times by up to 40 minutes and increase capacity redevelopment plans underway that will see the on the capital’s transport network by 10%. The improvement in both connectivity creation of much more attractive and pedestrianand capacity will open up new parts of London, as friendly public space at well as trigger wider investment and regeneration. street level. In property terms, Crossrail is a game changer. It Since Crossrail got It is anticipated house prices has already affected key investment decisions, acting the go ahead, house will increase by an average of as a catalyst for further development and providing a prices around the 2.5% per year around Crossrail significant boost to property values. affected stations have The local housing markets along the Crossrail increased by 20%. This stations. This equates to a stretch will benefit. As a result it is anticipated house is on top of underlying total increase of 13% over prices will increase by an average of 2.5% per year capital appreciation and above wider underlying around Crossrail stations. This equates to a total in London and the increase of 13% over and above wider underlying South East. Although capital appreciation. capital appreciation by the time Crossrail becomes this partly pre-empts fully operational. In Central London, the overall the actual transport increase is more likely to be in the region of 20%. benefits and value increases that will be felt from Crossrail will completely transform London’s public transport system. It will 2018, at this stage it mostly reflects the swell of increase its capacity by 10%, enabling over 200m passengers to make their way in confidence into these areas and the physical and around London per year, as well as significantly reduce journey times. These regeneration already underway. improvements will have a huge impact on the economy of London and the South These increases are likely to be even more East, connecting new areas and creating new opportunities for businesses to grow. pronounced in Central London, at 3.7% per The impact of Crossrail on property will be two-fold. Firstly, the improvement in annum, or around £100,000 per property, over the connectivity will open up new districts and reduce travel times, both of which will next five years. Overall, Crossrail could add around directly drive values in the commercial and residential sectors. Secondly, it will act as £14.7bn to the residential property sector across a catalyst for broader investment and development around the affected stations. the 37 stations. These wider improvements will also unlock considerable underlying value. Although In the western stations, where the reduction in the first lines won’t be operational until 2018, its impact is already being felt as the travel times are the greatest, we expect some of imminent improvements drive confidence and become key considerations in the largest impacts on residential values, outside of
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Central London. Our model suggests that Crossrail will trigger house price increases of around 2.9% per annum between Maidenhead and Acton, or around £50,000 per property over the five year period. This is roughly four times the average increase in East London, which is likely to be closer to 1.7% per annum, or £21,000 over the five years. Overall, the biggest winners will be Ealing, Broadway, Farringdon, Paddington, Bond Street and Tottenham Court Road. Homes in these areas could see higher increases, of up to £100,000. A 10% reduction in commuting times can cause house prices to increase by 6%. We anticipate total house price growth of 13% around Crossrail stations between now and 2018, with up to 20% in Central London. This is expected in addition to underlying capital growth. There is no doubt that Crossrail will be a game changer in property terms. By increasing the volume of people travelling into Central London, Crossrail will unlock huge expansion potential. From an office perspective, areas like Farringdon and Canary Wharf are particularly exciting. Infrastructure projects on the scale of Crossrail are essential to both the London economy and that of the wider UK, ensuring that we keep pace in an increasingly globalised marketplace. With a total cost envelope of £14.8bn and an overall estimated benefit of £42bn, there will surely be plenty of winners. All in all diversity is key and Crossrail locations in my view seem like a sensible investment; however the type of property is a different topic all together. Complete RPI will after ascertaining our clients objectives advise of specific investment opportunity and how it fits with current exposure to the market. Like all property investment one should look to invest over the medium to long term (6 – 10 years) and Crossrail locations are far from an exception to the rule. Phase one is scheduled for completion in 2018. HKGOLFER.COM
BESPOKE ONLINE PLATFORM
It is vitally important to keep on top of all aspects of your residential property exposure and at CRPI we have created a bespoke online platform allowing our clients to access vital information about their property 24/7 such as: • References • Tenancy Agreements/Legal documentation • Income and Expenditure Reports • Management Statements • Invoices • Works Orders
• Live Capital and Rental value reports • Postcode demographic information • Inventories • Interim Inspection reports • Internal / External photographs • Investment Analysis
Access is gained through a web portal of which our clients are given an encrypted password, limited access is also available in the accounting section designed for accountants and Tax returns, our clients really like this!
YOUR PROPERTY, OUR PRIORITY Let Complete RPI overview your UK property free of charge and answer the following questions: - Is your property under-let? We increased our rental income for client's by 7% last year, did your agent? - Have you contracted with the most up to date tenancy agreement? Changes in legislation occur daily. - We only charge monthly fees, are you paying up front? We charge a monthly Letting & Management Fee and no up-front fees, does your agent do the same? - We offer free rental guarantee insurance, does your agent? - Is your property inspected every three months by an independent inventory clerk? If not it should be and we pay the cost. Does your agent? - Do you have 24 hr access to your very own bespoke online property platform which allows you to view all aspects of your property including management statements, invoices, interim inspection reports, values, gearing ratios, etc ... at Complete RPI this is standard. The answers to these questions and many more could both save you money and increase the return on your capital invested. Please call us on +852-9307-0337 or write to info@completerpi.com Why not visit us at www.completerpi.com ... “Your Property, Our Priority."
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