WHY INVEST IN LONDON? - Savills Middle East
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WHY INVEST I N LO N DO N ?
SAVILL S | SECTION NAME |
CONNECTING LONDON
The Elizabeth Line is Europe’s
largest infrastructure project. It
THE
will stretch more than 60 miles
and stop at 41 stations - 10 of
which are newly built and 30
GLOBAL CAPITAL
newly upgraded. It will have the
capacity to reduce journey times
by up to 50% and put 900,000
more jobs within a 45 minute
commute. The project is due to
boost the London economy by an
estimated £42bn.
If any city could claim to be ‘capital of the world’, it is indisputably
London. Renowned for its global standing in terms of business and
trade, amenities, quality of life, facilities offered and stable legal and
political systems, London is the most high-profile location for property
investment across the globe.
Other reasons which make it an attractive office hours cross both. With many company
place to live and work include its time zone, headquarters based in London there is a high
use of the English language, historical turnover of people moving to London, and
and global ties, world class educational this is a key driver of prime rental demand.
system, access to the financial markets and
transparency of property tenure. London is also home to a large number of
multi-millionaires, in fact the number of
The powerhouse of the UK economy, London ultra-high net worth individuals in London
is growing stronger still; over the past ten has increased by over 10% in the last year.
years it has contributed £3 trillion to the UK Despite political and economic uncertainty as
economy (21% of GDP), and over the next a result of the UK’s vote to leave the EU the
ten years it is expected to rise to 25% of factors that make London a premier world
UK GDP, according to Oxford Economics. city remain unchanged over the long-term.
London attracts companies from around the London will remain a key economic and
globe. Located between America and Asia, cultural centre and will continue to be the
London is able to conduct business with both preferred global destination for people to
the East and West, and its time zone means invest, work and live.
A TECHNOLOGY HUB
Announced a £1 billion investment In July 2017, Amazon announced Facebook announced it will double
into a London headquarters at King's plans to double the size of its its workforce in the UK when it
Cross, set to create 3,000 new jobs research and development team in opens its new London headquarters,
by 2020. London by creating 450 new jobs. creating an extra 500 jobs.
In January 2017, Snap Inc, the founders Apple has confirmed a £9 billion
of social media platform Snapchat, investment into its new London
confirmed London as the location for headquarters at Battersea Power
its international hub outside of the US. Station, equating to 1,400 jobs.
2 3
SAVILL S
PRIME CURRENCY
GROWTH PLAYS
The Currency Advantage for Overseas Buyers
Since the EU referendum vote, there has been Singapore
an increase in overseas activity GBP Chineses Yuan
purchaser into Sterling
USD into
Sterling
Japanese Yen
into Sterling
Euro into
Sterling
Dollar into
Sterling
0%
As a result of the weak pound (sterling has As an example of the currency advantage for -5%
fallen c.9% against the US Dollar since June buyers who are not denominated in GBP, those
2016 and initially fell -14% in the two quarters purchasing a £1m prime London property in
after the vote) and a perception of better value US Dollars in Q4 2018 will pay approximately -10%
due to some pragmatism from developers over 21% less than in Q1 2016, accounting for both
price. Across the prime new build market the currency movements and prime house price
proportion of international buyers increased to inflation. -15%
68% in the second half of 2016 after the vote, up
from the 55% seen during H1 2016.
-20%
-25%
Currency effect (into Sterling) Exchange rate adjusted price change, Q1 2016 v Q4 2018
Source: Savills Research, Bank of England
Annual Growth Across the Prime London Market
Despite recent tax changes, the cost of buying in London remains less expensive than other
Prime Central London Other Prime London cities. The comparative costs of buying, holding and selling a $2million property as an overseas
investor is competitive in London when compared to other global cities.
40.0%
The Comparative Cost of Buying in London
30.0%
Cost of Buying Holding Cost (5 years) Cost of Selling
Annual price movement
20.0%
Percentage of property price
40.0%
35.0%
10.0%
30.0%
25.0%
0.0%
20.0%
15.0%
-10.0%
10.0%
-20.0% 5.0%
0.0%
Vancouver
Hong Kong
Singapore
Tokyo
Sydney
Berlin
Paris
New York
London
San Francisco
Dubai
Shanghai
Mumbai
Dublin
Moscow
-30.0%
Sep-16
Sep-17
Sep-18
Sep-09
Sep-12
Sep-13
Sep-14
Sep-15
Sep-10
Sep-11
Jun-16
Jun-17
Jun-18
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Mar-17
Mar-13
Mar-14
Mar-15
Mar-16
Dec-16
Dec-17
Mar-18
Dec-18
Dec-14
Dec-15
Dec-08
Mar-09
Dec-09
Mar-10
Mar-11
Mar-12
Dec-10
Dec-11
Dec-12
Dec-13
Source: Savills Research Source: Savills Research
4 5
SAVILL S | SECTION NAME |
LONDON
IN NUMBERS
CULTURALLY
DIVERSE WITH OVER
300
RECORD UNEMPLOYMENT
RATE OF
LANGUAGES
SPOKEN
40
HIGHER EDUCATION
5.2% ESTABLISHMENTS
THERE IS DEMAND FOR OVERNIGHT
MORE THAN TOURISTS SPENT
7.2 million sq ft GDP IS SET TO $994m
OF OFFICE SPACE IN INCREASE BY IN LONDON
CENTRAL LONDON
28% IN 2016
BETWEEN 2018 & 2028
LONDON IS
FORECAST TO GAIN
615,000 THERE ARE
NEW JOBS BY
2028 71
30,800 MICHELIN STARRED
POLICE OFFERS RESTAURANTS IN LONDON
DEUTSCHE BANK
HAS SIGNED
49
500,000 sq ft HOSPITALS, CLINICS AND
IN OFFICE SPACE IN LONDON £4,155 MEDICAL SPECIALISTS IN
THE HARLEY STREET AREA
FOR 2023 ONWARDS PER PERSON IN
TRANSPORT SPENDING
6 7
SAVILL S
THE FRONTRUNNER
IN EDUCATION
London has more highly-rated universities than any other global city.
These include Imperial College, University College London, Kings
College London and London School of Economics
London’s educational offering
Combined score in top 50 Number of institutions in top 50
400 4
350 3.5
QS World University Rankings;
No. institutions in top 50
combined score in Top 50
300 3
250 2.5
200 2
150 1.5
100 1
50 0.5
0 0
London
Hong Kong
Singapore
Beijing
New York
Sydney
Boston
Stanford
Cambridge, US
Pasadena
LONDON’S COMMERCIAL MARKET
Last year, the total amount of office space let across central London totalled
12.6million sq ft, the highest level of take up for 20 years. Another sign of
confidence in London’s future has been the type of companies that have Source: Savills Research, QS World University Rankings 2019
taken space, and the length of their commitments. In 2017, the largest letting
in the City of London was to Deutsche Bank of 564,000 sq ft. This was
significant because it was to a German bank which was committing to a large
headquarters for a building which won’t be delivered until after 2021. This
demonstrates the confidence in London’s economy post-Brexit.
Buckingham Big St. Paul’s Tower of The Tower London The The O2
Palace Ben Cathedral London Shard Bridge Eye Gherkin Arena
8 9
SAVILL S
REASONS PEOPLE OUTLOOK FOR
CONTINUE TO BUY IN THE LONDON MARKET
LONDON
The prime London the market remains exposed to fluctuations
in buyer sentiment and general economic pressures resulting
from the vote to leave the EU.
This points to a subdued market for the rest of 2019 Once we have a better understanding of the detail
as buyers wait to see how negotiations to leave of the Brexit deal in 2020, confidence will return to
the EU proceed and the precise economic impact the market and support a bounce back in 2021 given
CULTURE HERITAGE LANGUAGE becomes clearer. This will present some opportunities London’s global city status and its competitiveness
for those prepared to take a long-term investment with regard to global tax burdens. We expect to see
view and who have put themselves in a strong a general election in 2022 which may cause some
position to buy. Opportunities could also arise for uncertainty in the market, but thereafter we expect
those buyers (both international and domestic) who the prime London market to return to trend growth.
are not denominated in sterling given the weakness of
the pound.
SECURITY EDUCATION MEDICAL SPECIALISTS
(HARLEY STREET)
WE ARE FORECASTING
GROWTH OF
12.4% between
2019 & 2023
FOR PRIME CENTRAL
MATURE REAL
LOW INTEREST RATES TIME ZONE LONDON
ESTATE MARKET
AND GROWTH OF
7.1%
NIGHTLIFE GLOBAL BUSINESS CENTRE FOR OTHER PRIME
LONDON REGIONS
10 11
CONTACTS
Robert Pearce Clementine Malim Hassan Basma
Head of International Associate - International Middle East Desk
Residential Middle East Residential Middle East hassan.basma@savills.com
robert.pearce@savills.me clementine.malim@savills.me +44 (0) 20 7016 3769
+971 (0) 56 174 2365 +971 (0) 50 558 2853 +44 (0) 7814 115 832
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