Is London still the hottest place to invest in property?

Is London still the hottest place to invest in property?

London has been one of the most popular places for overseas buyers to spend their money for some time, largely thanks to its reputation as a safe haven for cash and the fact that it offers a real chance for strong returns. 

During the eurozone crisis in particular, when nations across the continent were struggling with the fall of the single currency, England was seen as the perfect place to put money, giving people the chance to protect their wealth while their own nations were struggling. 

But as Europe has started to stabilise and recover, is London still seen as such a great place to invest, or has it started to drop in popularity? 

According to findings from the LaSalle Investment Management’s European Regional Growth Index (E-REGI), although generally speaking, more people are looking to cities away from the traditional big hitters, London, along with Paris still reigns supreme. 

The report said that the main reason people are looking towards putting their money in smaller cities is the fact that they can get stock for lower prices than they would in more popular places. What this means is that it is easier for them to hit their goals because they are spending less in the initial stages. 

However, even though this sentiment has become more popular, the likes of London and Paris still remain at one and two on the list of top cities from the report. It said that not factoring in local growth trends, demographic changes and human capital, it points out can mean that people see poor medium-term returns from other cities, which means many return to investing in more stable markets. 

"The index not only determines which real estate markets are likely to out or underperform in the medium term, but combined with our on the ground expertise we also use the index as a strategic framework to match cities with the most relevant investment styles," said Mahdi Mokrane, LaSalle Investment Management’s head of research and strategy for Europe, as he looked at the reasons for people still investing in London. 

One of the key reasons is diversity. Diverse portfolios in property have become more popular than ever because investors can mitigate against falls in some areas by not having all their eggs in one basket, while they can also see the positives of any pick up in activity in a range of different property types. 

The report said that extraordinary resilience of such cities as London, combined with their deep investment markets, justifies targeting them for a wide range of investment strategies, which means that they are best placed for those who are looking to provide a more diverse portfolio. 

Munich, Frankfurt, Hamburg, Stuttgart and Amsterdam rank alongside London and Paris in Europe as some of the best places for those looking for traditional investment, while the study also showed that a number of different British cities such as Manchester and Leeds are becoming more popular than ever thanks to their cheaper prices and potential for growth in the long term. 

However, while we are seeing emerging cities across the UK come to prominence, London seems like it will continue to be a popular place for investment for some time. Stability, long-term potential and the chance to diversify in a market that works positively in a number of sectors mean that investors still see the city as one of the very safest places in the world to put their money.