{"id":252,"date":"2015-02-07T00:42:25","date_gmt":"2015-02-07T00:42:25","guid":{"rendered":"https:\/\/blog.propertypartner.co\/?p=252"},"modified":"2019-02-22T10:39:14","modified_gmt":"2019-02-22T10:39:14","slug":"the-investment-case-for-whitechapel","status":"publish","type":"post","link":"https:\/\/www.londonhouseexchange.com\/blog\/the-investment-case-for-whitechapel\/","title":{"rendered":"The investment case for Whitechapel, London"},"content":{"rendered":"
The investment case for Whitechapel, London<\/div>\n

We believe that the investment case for residential property investment in Whitechapel is compelling.<\/p>\n

Three specific factors underpin the investment case for the area and the specific property on our platform.<\/a><\/p>\n

Firstly, the area, which is within walking distance of London\u2019s financial heart, is undergoing a social transformation and looks likely to undergo some of the dramatic gentrification seen in nearby Shoreditch and Hoxton.<\/p>\n

Secondly, a Crossrail station is due to open in Whitechapel in 2018. Crossrail is currently Europe\u2019s largest infrastructure project and represents a major improvement for public transport in London. JLL expect Whitechapel to benefit most from Crossrail driven capital growth over the next 5 years.<\/p>\n

Thirdly, our Whitechapel property has an estimated gross rental yield of 4.84%, which is a very favourable figure for central London.<\/p>\n

Changing social dynamics and gentrification<\/div>\n

Whitechapel\u2019s demographic legacy is one of immigration and local authority housing. It has Victorian housing stock and is within walking distance of the City of London, which is London\u2019s financial district.<\/p>\n

Since its prices are lower than in neighbouring areas, it is seeing an influx of young professionals, notably those working in the City. Large-scale developments (e.g. \u2018Cityscape\u2019 and \u2018Goodman\u2019s Fields\u2019) are bringing more than 1,000 new high-end homes into the area.<\/p>\n

Whitechapel is next to Shoreditch & Hoxton, which have seen very stark gentrification and capital growth in the last decade. Given the considerably lower price-levels in Whitechapel and a similar demographic shift in favour of young professionals, we expect strong price-rises in Whitechapel too.<\/p>\n

Whitechapel is very well-connected by public transport. It has multiple stations: Aldgate, Aldgate East and Tower Hill (all London Underground stations in ‘Zone 1’), Whitechapel (a London Underground and London Overground station), Shadwell and Tower Gateway (Docklands Light Railway stations) and Fenchurch Street (mainline station).<\/p>\n

In addition, Whitechapel is due a station on the new Crossrail line…<\/p>\n

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Crossrail: Europe\u2019s largest current infrastructure project<\/div>\n

Crossrail is a new, high-speed railway line crossing London and also Europe\u2019s largest infrastructure project.<\/p>\n

Although already well-connected, Whitechapel will be one of 38 stops along the new Crossrail line that runs from Reading in the West to Essex in the East. Once the line is complete in 2019, the journey from Whitechapel to Canary Wharf will be reduced from 12 minutes to 3 minutes, and the trip to Heathrow Airport to 36 minutes. The line increases London\u2019s train capacity by 10%.<\/p>\n

A third-party forecast for capital growth in Crossrail station locations estimates that Whitechapel will benefit from higher capital growth than any other area, at 54% for the period 2014-2020. A topic covered by The Telegraph recently too, you can access the article here.<\/a><\/p>\n

\"Screen<\/a><\/p>\n

You can also read more about Crossrail in a previous article we wrote.<\/a><\/p>\n

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An unusually high rental yield for Central London<\/div>\n

Our investors have told us that they have a strong appetite to invest in London properties. Whilst we are keen to cater to that, we\u2019re mindful that rental yields have compressed in recent years – and we favour investment opportunities with a net investment yield in excess of<\/em> inflation and medium term interest-rate expectations, for greater investor protection should capital values experience volatility.<\/p>\n

With the Bank of England\u2019s inflation target at 2% and medium term interest rate expectations below this, our hurdle rate is a net income yield of at least 2% (excluding capital growth). This rules out much of central London. However, our Whitechapel property qualifies comfortably with a net dividend yield of 2.9% after fully accounting for purchase costs and fees.<\/p>\n

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