Stratford, Property Investment and the Olympics

Why some property locations have failed to live up to the hype by David Lawrenson of www.LettingFocus.com

There was another good article last week in the “Investors Chronicle” which documented the poor returns folks have had who bought into areas close to the Olympic Park in Stratford in East London. Here, house prices have underperformed the rest of London and rents are pretty stagnant too.

Of course all these “investors” in flats had failed to heed warnings from people like me and Savills and Knight Frank who five years back had predicted a looming oversupply would emerge in the area close to the Olympic Park.

And once the Olympic Village properties, which have been used to house the athletes, are released for housing this situation will only get worse.

Their experience points to one enduring truth about buying property – and that is this: Just as any other type of investment there are always people around whose job it is to hype up the investment in order to earn commissions.

Promising Story

Looking back five years ago, the story the promoters could tell looked promising – there was the coming Olympics, a brand new international station for trains at Stratford, a new shopping centre and a location very close to the City of London and Canary Wharf.

All this should indeed have worked to improve returns to buyers. But too much new build stock of the same type in the area counteracted these factors – thus holding back rents and house prices.

Now, for some folks I am known as the guy who is against investing in new build.

That is not strictly true – there are many good new build properties. But a lot of new build stock comes with issues attached – too many units, too much sold into the private rented sector to absentee (often overseas) landords and too much stock chasing too few tenants.

Tenants May Be Winners

Such places are a “tenants market”. They can (for once) bid down rents from the hundreds or thousands of landlords offering identikit stock.

Property buyers, whether landlords or those buying for themselves, who have a solid understanding of the property market can make money by avoiding the hype and buying into other areas / types of property that will really see positive impacts from regeneration and transport improvements but which are not hurt by oversupply of new stock.

Sometimes the best advice is just to avoid the advisors!

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