Buy Property Near To New Rail Routes
Buy Property Near To New Rail Routes
Much of the money I have made in property over the years was made by buying into areas where improved investment infrastructure was coming to the local area – and ahead of that investment happening. I think in economics this is called a “producer to consumer externality”.
The new investment could be in the shape of a new manufacturing plant or service centre opening up or it could come in the shape of better road or rail infrastructure. Whatever shape it takes, all these things have the effect of being a real driver to house prices and rents, in time.
In most cases for us it was transport infrastructure. Then we just waited for time to do the rest and scatter the magic around. We always waited until the project was moving ahead and the diggers were moving earth, we never invested if there was still a chance the project could be cancelled.
London Rail Routes
We are based in London and we bought property in Bermondsey in 1996 in South East London ahead of the extension of the Jubilee Line starting. Later on, we bought into Lewisham when the Docklands Light Railway extension from Mudshute to the south of the river was being built. And in 2004, we bought into Brockley ahead of the extended East London Line starting back up (now renamed and part of the Overground).
In 2012, we bought in Gravesend, anticipating the development of the huge leisure theme park nearby planned for close to Swanscombe, which will get a boost from the very fast international rail links from nearby Ebbsfleet.
If you look at the places in London, (or indeed anywhere in the UK), that have shown outperformance in terms of houses prices over the last ten or fifteen years, they have nearly all been the beneficiaries of improved transport.
Probably, the fastest growth of all has been in Hackney in London on the new bit of Overground, (part of an extension of the above mentioned East London Line, which used to stop short of Shoreditch at one end and New Cross at the other). This chunk consisted of a new piece of line in the north of London, which put places like Dalston and London Fields on the “mental Underground / Overground map” of Londoners.
When to Buy Into Rail Routes
The impact of new transport connections ripples through into housing prices long before the project finishes. In the early planning days there is often a bit of a knowledge gap, with few knowing (or caring) how the new infrastructure will shape an area. Small investors are often first to act.
So a lot of the advice we give our own clients here at LettingFocus is to show them how to find and evaluate the areas that are set to do well due to new money coming in, especially new employment hotspots and transport nodes.
The bigger investors and the new office and house builders usually only follow a few years later, when a new infrastructure project is really underway, usually delivering new housing (and often offices, shops etc.), often only a few years in advance of new rail or tram or tube opening dates. And often after it has been open a while.
A good example of this is the area called More London Bridge, close to the new station of the same name and the extended Jubilee Line. This was an empty space fifteen years ago. Now it is choc-full of high-end offices and of course, the City Hall.
Artisan Bread and Coffee
When it is only months to go before opening date, is when the owner occupiers finally pile in – in the case of Hackney with their artisan bread and coffee shops. Often they are only willing to wait only twelve to thirty six months or so before they can take advantage of the new links themselves – which is of course, great new for savvy buyers who got in earlier.
For example, it is only in the last two years that we have seen outperformance of house prices all along London’s Crossrail 1 (now called The Elizabeth Line).
Regeneration can prove a further boost too – think Kings Cross in London.
Birmingham centre is seeing some big developments being announced on the back of HS2 and the area around Manchester Piccadilly station will likely see a whole lot of residential and commercial development on the back of the fast link. Places close to Manchester Airport’s HS2 stop, such as Hale and Wilmslow will also do well.
So what else is coming down the track!
Chris Grayling the Transport Minister, said he was looking at which of the rail lines, shut in the 1960s under the Beeching cuts, could be re-opened. The Campaign for Better Transport has made a list of twelve “important and viable” lines that could be restarted across Britain. These are worth checking out.
Varsity Rail Route
One project already announced is the Varsity Line between Oxford and Cambridge. As well as Oxford and Cambridge, Bicester, Bedford and Milton Keynes will benefit too, though the planned new housing will soak up some of the prices rises here. There is a package of £44bn of money to increase the delivery of new homes, including £30m a year for five years towards infrastructure and affordable housing in Oxfordshire, for the Cambridge-Oxford-Milton Keynes corridor, along the new line. Some of the cash will be for Didcot and Bicester, where 30,000 more homes are planned. Oxfordshire has committed to the building of 100,000 new homes in exchange for this money.
Another place that is well starred are on the planned Aberdeen to Inverness rail improvements, such as Kintore and Dalcross. But there are many more around the country.
Deals like the one in Oxfordshire are planned for other places too, so investors should keep an eye out for these and evaluate how such schemes could enhance values in such favoured areas. Fix a consultation with us to find out more.
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