Landscaping the real estate arena in and around London

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Moving out of the city and towards the suburbs is an ongoing trend that doesn’t show any sign of slowing down. Excluding the obvious price difference and value for money that is achieved from living outside the city limits, there are a few other driving factors. The major drivers have been the attraction for being closer to family, becoming part of a community and the desire for green spaces.

London has attracted real estate owners from both UK and overseas investors. However, with overseas investment now pushing the price of real estate assets to record highs, Londoners are beginning to look elsewhere to live. When looking at pricing, Zones 1 and 2 in London typically vary from 600GBP/SQFT to 900GBP/SQFT, and can often be a lot higher for luxury developments.  Out of town suburban areas, within the commuter belt (less than 1-hour commute times into Central London), can be priced at 300GBP/SQFT to 400GBP/SQFT. With travel links now much more reliable and young professionals with families being priced out of the market, they are often left with no choice.

While the trend for moving outside cities, in particular London, is not something new, the lockdown has highlighted the difficulties and downsides of city living. After being trapped in properties smaller than their outer city counterparts, with less access to a garden and suffering the inflated rental prices, people have begun to revaluate. Also, as the proximity to the office becomes negligible with remote working, the pros of urban life are becoming less pronounced.

Of course, migrating to the suburbs is not unique to the Covid-era; the Office for National Statistics (ONS) figures show 340,500 people left London in the 12 months up to June 2018, and 336,000 the year before (the largest numbers since 2012). However, it has changed the housing demographic and fundamental real estate market over the last 10 years.

For Berkeley Assets, real estate is our underlying focus across all sectors we invest in. As a private equity firm, it is crucial to identify opportunistic investment areas within our field of expertise. Thus, at Berkeley Assets, we have moved away from central London developments unless particular opportunities of note have presented themselves. These have typically been one off projects, where the underlying fundamentals have provided a solid platform for income yield and capital gains. We have focused on up-country towns within commuter distances of urban metropolises, both in the North and South of the UK.

As land prices have been forced up due to furious competition, Berkeley Assets has focused on more suburban areas. Furthermore, we have spread our portfolio across student accommodation, assisted living and social housing developments. It was through our rigorous due diligence in trend analysis that has allowed us to stay abreast of real estate trends within the UK. This has proven the need for us to be adaptable and change focus when required to ensure both income and capital yield.