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No 'Olympic' house prices

Jul 15 2012 12:59
Elma Kloppers

Johannesburg - Property prices in the vicinity of Olympic Park in London have not seen the anticipated revival.

Despite huge hype prices in Stratford - to the east of the area where the Olympic Games begin later this month - have underperformed, as indicated by a report by residential market analyst Hometrack.

According to the report average values in Stratford in 2001 were 30% to 35% below property values in the Greater London area. In 2006, the year when London’s bid for the games won, this gap shrank to between 10% and 20%. It has again swelled to 35%.

House prices in the British capital have nevertheless fared well and, according to Land Registry data, prices in the Greater London area in April this year were 5.1% higher than the year before. In Newham, where Olympic Park is situated, growth of 2% year on year has been measured.

Mike Smuts, managing director of Smuts & Taylor, says this contrasts with Kensington and Chelsea, where prices leapt 11.6% as rich investors streamed to London as a safe haven for their wealth. Smuts & Taylor is a South African investment firm that specialises in helping South Africans buy property in London.

Smuts says although there has always been a difference of opinion about the impact events like the Olympic Games can have on property prices in the host city, research confirms that they have no effect on a city like London.

But what is beneficial for future house-price growth is investment in infrastructure. “The positive legacy of the Olympic Games will therefore arise from the infrastructure upgrades rather than the event itself.” This was also the case in South Africa with the World Cup Soccer tournament.

The infrastructure upgrades include the £6.5bn investment in London’s transport system, as well as a £1.5bn investment in the Westfield shopping centre in Stratford.

According to Smuts the average rental in Greater London is currently £1 177 a month, 7.9% more than last year.

A graphic representation of the new Providence Tower development in London’s Canary Wharf, which is being marketed by Smuts & Taylor. Prices start at £260 000 and the investment is expected to produce a gross rental yield of between 5% and 6%. The building is under construction and will be completed by the end of 2014.

The Pan Peninsula residential development in London’s Canary Wharf.

 - Sake24

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olympics 2012  |  london  |  property market



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