Housebuilders in London’s luxury property market are now looking into England’s North as a source of future growth as the capital’s high-end property market undergoes a downturn.
Berkeley Group, one of London’s luxury builders, has now opened a new division in Birmingham, its first one outside of London and the south-east in more than a decade.
With tougher property taxes and the Brexit vote, prime properties in the capital have dropped by 12.5% since its peak in 2014, estate agent Savills states.
By starting its new division in Birmingham, Berkeley is now changing its original strategy from 2005 when they were only focusing on property in London and the south east, the Financial Times reports.
Rob Perrins, chief executive of Berkeley, says:
“Birmingham is on the rise, with a can-do council that seems keen to encourage development. We want to bring a distinctive approach to the local market.”
The new division will create a range of new housing, from affordable and family homes to luxury housing and student accommodation.
Anthony Codling, analyst at Jefferies, said: “There is a view from some investors that having all your eggs in the London and the south-east basket is a double-edged sword, and it’s swinging one way at the moment. It can potentially be viewed as a negative.”
Berkeley’s move may not come as a giant surprise as an oversupply of new-build apartments in London has been looming for a bit, the Financial Times state after viewing research documents by Molior London.
The same research says that the number of construction starts of new homes in inner London have been higher than those sold since 2012 which led to more than 10,000 unsold units by the end of 2016.
In December, Berkeley revealed that its sales reservations dropped by 20% since the country voted to leave the EU in June last year. Additionally, the builder explained that most of its recent purchases had been in outer London and the home countries rather than the inner London market.