Assetz® News - All about location

All about location

2nd December 2008 |

If 'Location Location Location' sounds like not just a TV programme title but a hackneyed phrase, that may be because it is. But the apparent overuse of the term is for the best of reasons - because, as industry experts will always say, it remains relevant.

Emphasising this at the recent Landlord and Buy-to-Let show in Birmingham, David Bates, business development manager at property firm dandara, insisted this has not changed, no matter what other considerations buyers take into account.

He stated: "Location is everything. People keep buying properties below market value and there are some great deals but you've still got to do your homework on where you buy. It's all about location."

To emphasise the point, he added: "[Ask:] What is the economic growth and outlook for that particular area? Is there a population growth forecast? What employment opportunities are there? All these things have to be taken into consideration."

Mr Bates noted a number of particular advantages to certain locations. Being near a university for student property is one. Another is being close to a hospital. Then there are transport links, such as proximity to roads, railways and airports.

Investors may in fact be familiar with these concepts, having taken them into account on many occasions. Student rental investors, for example, may consider the impact of new universities arising in places that until recently did not have them, such as Ipswich, Carlisle and latterly Peterborough. Others will have taken note of major transport projects, such as some of those occurring in London in connection with the London Overground, Crossrail and of course the Olympics.

Remarking on news that Crossrail is getting £230 million from the British Airports Authority to help its funding - in return for its provision of services to and from Heathrow - chief executive officer of the Young Group of property portfolio managers Neil Young said last month that property investments will be more valuable in those areas that gain a new transport link via Crossrail.

He cited his own company's experience of the East London Line extension as an example, commenting: "Within 18 months of the project announcement, prices in Dalston at Young Group's development, The Interchange, increased by around nine per cent over and above the average for London during that period, which provided our purchasers with a healthy cushion against the current conditions."

With this in mind, investors in the Manchester area may soon have some new opportunities. Voters are currently taking part in a postal referendum to decide if a new congestion charging scheme will be introduced, which will raise revenue to fund a quid pro quo loan from the government for planned public transport improvements. These will include new high-speed bus routes, extra trains and an extension of the Metrolink tram system.

Parts of south Manchester where the bulk of the extra tramlines will be established if the vote goes in favour could be the beneficiaries of this price trend. At the same time, some expansion of the system has already received funding, particularly to the north and east of the conurbation. Investors in the area may watch the outcome of the vote closely before deciding where to buy next.