Choosing a property close to a major regeneration site can reap huge rewards in terms of house price gains. Is this the secret to successful property investment?
A new study focusing on 11 key regeneration projects across London, conducted by property investment and services firm CBRE, has revealed that these strategic locations have a huge impact on capital growth in housing.
On average, homes within a 750-metre radius of one of the selected long-term regeneration zones saw their values increase by 3.6% more than equivalent properties in the wider local authority area. The study also found that, looking at house prices from the start of a project through to today, there was an average 1.5% higher annual gain compared to the local authority average.
More than just building houses
The study excluded homes built within the regeneration projects themselves, as new-builds tend to attract higher price tags than existing housing, which could have skewed the results. It looked at key projects such as the Olympic Park in Stratford, which saw nearby house prices rise by 5% more than the local average, and Woolwich and Royal Arsenal Riverside, which had the highest premium in nearby house price growth of 7.6% more than the average in the area.
Regeneration encompasses a lot more than just building new houses, as James Bearryman, senior director at CBRE Residential, points out.
“It is about creating spaces for people to live and work in happily. Alongside new homes, you can expect to see improved parks and public spaces, and revived retail, leisure and work centres.”
“That’s why the benefits are felt more widely than just by those living in the immediate regeneration zone, as our study of the impact on house prices shows.”
Travel options are key
Transport and infrastructure play a major part in any successful regeneration project, and indeed are one of the most vital aspects to look at when thinking about property investment. Areas that may have once been deemed undesirable due to lack of accessibility can suddenly be opened up, gaining in popularity as people are attracted by the improved transport options.
This played a major part in the success in Woolwich. “Woolwich has traditionally been connected to North London by the foot tunnel and ferry, with links into the City and Canary Wharf by DLR and railway,” Bearryman added.
“But the arrival of Crossrail and the new station has helped drive continuing change, and once the Elizabeth Line opens, Canary Wharf will be only seven minutes away, and the City can be reached in fourteen minutes.”
Opportunities outside London
While the research only looks at the effects of regeneration on house prices in the capital, the theory applies elsewhere across the UK. Some major regeneration projects have transformed, and continue to transform, the face of some of the country’s towns and cities, and this is particularly prominent in areas that once lacked interest from investors.
At BuyAssociation, we keep ourselves informed of regeneration and developments across the UK’s towns and cities, using this as part of our strategy to select the best investment spots ahead of the market. Some good examples of this include Manchester, Liverpool and Birmingham, whose housing markets have gone from strength to strength in recent years.
Meanwhile, areas such as Preston and Bolton are receiving massive amounts of investment into redevelopment at the moment, and as the Northern Powerhouse initiative continues to have an impact, areas like these are becoming increasingly exciting places to invest.
Take a look at our investments page to see a selection of our current opportunities.
Rental prices in regeneration areas
It isn’t just house prices that are affected by investing in an area near a major regeneration project. A study earlier this year by letting platform Bunk demonstrated that some important areas across the UK had seen rental prices and demand boom as a result of investment in the area.
In Manchester, for example, rental prices have increased by an average of 38% over the past five years, with Salford Quays playing a major part in this shift.
According to Bunk’s study, rental prices in areas that had seen major regeneration since 2014 had risen by 21%, compared to the national average of 16%.