Property investment 2012

I was in London last week attending the AGM of one of my VCT companies, Albion Developments Plc. The setting was the resplendent City of London Club in the heart of the Square Mile.

Albion’s investments have weathered the financial ‘melt down’ pretty well.  This is partly down to its’ conservative gearing and partly down to its’ strategy of investing in businesses backed by property assets.  In particular it likes investing in businesses with high quality buildings in established, upmarket areas.

One example of its’ successful investments is in a chain of art house cinemas called Picture House.

In my chat after the AGM to Mike Kaplan, one of the Albion investment executives; he explained how the Brixton cinema was doing particularly well.  It appears that it now not only is the only cinema in the area but also it has a thriving café bar which has exploited the British new love affair with continental alfresco style dining.  It also highlights how a quality building and sense of place combine to create the environment for a successful property investment.

East London property investment

The other reason for my trip down to London was to explore the areas for potential property investment in East London.  We all know that come what may; 2012 will bring to the UK capital one of the worlds greatest sporting spectacles. 

The London Olympics of 2012 many expect will not only be a great sporting event, but also will represent an unrivalled opportunity for property investment in the UK’s capital.  Many property investors are banking on the Olympic effect lifting residential values and investment in the East of London as growth and regeneration transform the investment prospects of this part of the UK’s capital.

My East London Odyssey

I set off on my East London odyssey on a sunny June day armed with my trusty London AZ and a travel card on a mission to find the next London property hotspot. 

Emerging from Liverpool Street station in the heart of London financial district I headed along Curtain Road.  My first aim was to locate the hip enclave around Hoxton Square.  This area is located literally a stones throw from the shining glass towers of the City of London.  Fringed by the Square Mile; the back streets of this part of old London Town have certainly been transformed by the arrival of trendy incomers attracted by it’s central location and the edgy Ikonic White Cube gallery located on Hoxton Square itself.  The area had a hard, edgy grimy feel.  The plethora of bars are testament to its’ popularity with the 20 something party brigade. Hoxton is definitely on the up.

Columbia Road Flower Market has a hippy vibe

The next stage of my East London Odyssey was to move on to the hippy enclave of Columbia Road.  For those familiar with London, this area is home of the famous Columbia Road flower market held every Sunday.  Columbia Road itself is packed full of art and craft, furniture stores and there are many attractive roads off with pleasant Victorian houses.  There are also a number of council estates but the area has a relaxed child friendly feel making it ideal for young families.  The number of council or housing association estates does make me question how far the area can improve in the short term though.  This may limit it’s attraction to potential property investors.

London Fields is like a mini Marylebone High Street

I then pressed on drawn further north & eastwards towards an area called London Fields.  I’d read an article in the Evening Standard extolling this area of East London for its hip-ness and popularity with artists.  I was impressed.  I arrived at the Regent Canal and was immediately presented with a couple of hip cafes and cycling shop spaced along the water front.  Then I stumbled upon the main shopping street Broadway Market.  This pedestrian friendly high street had the feel of a mini Marylebone with butcher, bakers, fish shops and trendy cafes.  There was a real mix of local residents of families and singles.  To me this would be a place to live and buy, not just rent and move out when your partying days were over.

Georgian splendour in Hackney

I pushed on.  Legs aching, but buoyed by the thrill of pushing ever further into ‘enemy territory and away from the safe familiarity of West London. I discovered some exquisite Georgian properties along Cassland Crescent that any wear else in London would have been worth millions.  Instead you can pick up a detached 4 bed with 3 reception rooms for £1.25 million. The reason?  Many of these areas were often stranded in between large council estates and congested roads leading out of London.  The cafes and shops and warmth of a community hub had now gone and as entered the next stage of my journey I was aware as I moved along Cassland Road that I was entering a different more industrialised part of London, the Lower Lea Valley and site of the new Olympic Park.

The new Olympic stadium was a real disappointment!

Development abounds in this area.  There may be a down turn in construction in other parts of the country but in this part of London thousands of engineers, consultants, lorry drivers toil relentlessly to build a suitable back drop to the London 2012 Olympics.  My immediate thoughts as I started to pass blocks of isolated apartments was; why would somebody want to live here?

No bars, no shops, no community.  London Fields it certainly wasn’t.  The blocks reminded me of the characterless rabbit hutches that mushroomed in our towns and city centres during the property boom.

Finally, I got a glimpse of the new Olympic stadium.  I’d love to say it was a structure of beauty.  It isn’t.  Instead it looks to me like a building that has come about by committee.  An amalgam of ideas by cost planners, engineers looking at creating a design and build solution but not necessary a building to lift the heart.

As I caught the Tube back into central London after my epic trip.  I reflected on my experience.

My view of investment in East London residential property.

As a property investor, I would not be drawn by the soulless enclaves that are being thrown up in and around the new Olympic Park.  Because of the shortage of rental accommodation in London I’m sure many of the flats in this area will still have takers.  However, it’s not the way I make my investment decisions on property.  My criteria is always, would I want to live there myself? The answer has to be no.  Instead I would go for London Fields every time, just because of its’ attractions and sense of community.  If I was prepared to manage the party going exploits of twenty something party goers I may consider Hoxton Square.

City of London Club lessons. 

To me a key driver of good long-term property investment is to invest in quality assets and communities where people want to live.  If landlords are looking at investing in the regeneration premium expected from the 2012 Olympics then buying into an established area with a vibrant café culture will to my mind give property investors a better return.  So think carefully before been drawn into investing big money in the newly emerging blocks stuck out on the outskirts of central London.  They might have a big athletics track on their door step but that will probably be all.

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