Investment Education – Why high-rise glut is no headache for property investors

Population growth is a key driver of property investment potential

Visit any city in the UK, and you will see there is a consistent property investment theme. UK cities are getting taller. Skyscraper towers in London, Liverpool, Manchester, Leeds and Birmingham are changing the skyline and adding thousands of apartments. These towers are being built in clusters.

In London, for example, we see development on a monumental scale in areas including:

The skyline is being developed upwards at an incredible pace. It has prompted some property investors to ask if there will be a glut of apartments coming to the market. They’re worried about a rental price war. And they’re worried that property prices will fall because of oversupply. I think these concerns are misplaced.

High-rise is now up-market

In the 1970s and 1980s, ‘high-rise’ was a dirty word. It conjured up images of drab, grey, concrete towers of dilapidated council flats. Residents ‘benefited’ from elevators that didn’t work, stairwells that stunk of stale urine, and car parks full of abandoned or stolen Ford Escorts.

Today’s tower blocks couldn’t be more removed from their ancestors. Council tenants have been replaced by millionaires and millennials. Asking prices are high and rising. Rents are stepping up more storeys than the tower blocks themselves. Why? One reason: population growth.

Population growth is driving city planning

Staying in London, the number of people living there has exploded. In 1801, the London population was 1 million. By 1901, it had boomed to 6.5 million. Through the 19th century, this population explosion was accommodated by the urban spread. The population continued to grow until the beginning of World War II when it reached to almost 8.5 million.

The Blitz destroyed great swathes of the city. People were evacuated. Many never returned. By the late 1980s, the population had shrunk to 6.7 million. In the last 25 years, though, London’s population explosion has returned. It’s back up to almost 8.5 million and expected to rise to almost 10 million by 2031 (GLA population projections 2012).

Planners couldn’t expand outwards. Greenbelt land is protected. Faced with such population growth, there is only one way that developers could build: up. And that has produced some exceptional opportunities for London property investment.

High-rise property is in demand

What may have surprised property investors, planners and developers are just how in demand high-rise would be. But these aren’t high-rises as we used to know them.

Today’s property developers are building communities with a ‘sense of place’. Instead of bland blocks built merely to house people, they are building communities where people live. They are built in prime locations, near shops, schools, and transport hubs. They’re being developed hand-in-hand with widescale urban regeneration.

Many benefit from on-site amenities that include gyms, spas and hotels. Some apartment blocks have door security guards and cleaning staff.

Today’s tower blocks are places where people want to live:

  • People want to walk out of their apartment in the morning and be at work within minutes.
  • Millennials are increasingly shunning the car.
  • They want public transport options a short walk away.
  • They want security, modern and up-to-date appliances, and leisure facilities on their doorstep.

Every city in the UK is growing. And they’re growing up, instead of out. Prime locations are receiving planning permission and being developed.

London’s population is set to grow by 20% in the next three decades. 1.7 million more people. These people need homes, but get this:

It’s this huge demand for living space that will drive property values and rental prices in London.

The secret to profitable property investment

Ignore what you hear about there being a glut of apartments and tower blocks in the UK’s cities. Any such excess of building is likely to be a short-term issue and could present a great opportunity to buy in the best places to invest in property UK.

Here is the secret to profitable property investment. Do your research, and buy investment property that benefit from the fundamentals that drive demand:

  • Shops
  • Schools
  • Transport links
  • Major employers
  • Major investment

Our research methods include a unique Hotspots Algorithm. We analyse 108 data points across 324 UK areas and rank investment potential for property investors. We produce other in-depth research, like our HS2 Property Investment Opportunities magazine, which highlights the best areas to invest in property across the UK along HS2.

Contact one of our team today on +44 (0)207 923 6100, and we’ll be pleased to discuss our property research and latest property investment opportunities.

Live with Passion,

Brett Alegre-Wood

Brett Alegre-Wood
March 3, 2017

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