Property Investment Canary Wharf

Few upcoming areas offer as much potential as Canary Wharf in terms of property investment. Property prices, while still affordable, are steadily on the rise, and this is due to the area’s growing popularity. In short, now is the time to invest, before prices increase further.

Its appeal lies partially in its rapid transformation. Once a crumbling dockland, it’s been dramatically regenerated over the last few decades, turning it into a premier business district first, then a high-end residential zone.

One Canada Square set the tone for Canary Wharf, which is now an urban environment, full of stylish apartment blocks. Read below for some useful information about investing in the area.

What makes Canary Wharf a good area to invest in?

Developers have been active in Canary Wharf for several years now, creating exciting new residences, plus amenities and attractions for residents to enjoy. Thanks to this regeneration work, the area is gaining a reputation as an edgy city location, which is especially appealing to professionals of all ages.

It’s also an important business hub. With an estimated 100,000 people working in Canary Wharf, demand for housing is high, especially rented accommodation. This figure looks set to grow, thanks to the number of companies moving into the area. London City Airport is nearby too, which means there are plenty of airline workers and pilots also seeking a place to live.

The transport links are another big draw for residents. Canary Wharf station is on the DLR and Jubilee lines, and the pier runs regular boat services to locations like London Bridge and Embankment. There’s plenty of available property stock, as developers continue to be busy in the area. This means there’s never been a better time to invest here.

Property price trends

Canary Wharf’s property prices have risen almost continuously in the last decade, with several of the previous years exceeding average London figures by a significant margin. It’s estimated that those who purchased a property back in 2015 will now be benefitting from capital growth of around 40 to 50%.

At the time of writing, an average home in Canary Wharf costs around £500,000. This is roughly 13% less than the London average. Even more appealingly, rental rates are 10% higher than the average for the capital, which means there’s plenty of opportunity to generate a good profit.

Property prices do vary quite significantly in the area. A one-bedroomed apartment may be as little as £350,000, while a deluxe three-bedroomed penthouse by the river might cost several million.

Rental income

The average weekly rental rate for Canary Wharf is £824 – impressive, given how reasonable the property prices are. Rental costs have been rising steadily over recent years, which isn’t surprising, as demand for rented accommodation is continually growing.

A one-bedroomed apartment is likely to generate around £325 to £450 a week. By contrast, a penthouse in a top development may command as much as £3,500 per week. Rental yields are approximately in-line with the capital’s average.

What to look for in a Canary Wharf property

When searching for a property in Canary Wharf, consider the following:

  • Target market - The main demographic in Canary Wharf is professionals. These are often younger couples, though professionals of all ages may wish to rent in the area from Monday to Friday, while they’re working. They expect a high standard of living and are likely to prefer apartments that offer good access to transport links and local amenities. Students are another demographic in the area, for whom smaller properties appeal. There’s also rising demand from families with children.
  • Location - The most desirable locations in Canary Wharf are by the tube station, or the riverside (as the apartments here offer impressive views of The Thames).
  • Cost - If you want to generate a high income from a rental, you’ll need to invest in a premium apartment, preferably one that’s been tailored to appeal to the professional market. If your budget doesn’t stretch to this, there are cheaper apartments available, but these won’t command such a large rental rate. However, both are in high demand and represent savvy investments for the future.

Points to consider

When budgeting for your property investment in Canary Wharf, it’s wise to factor in the following:

  • Stamp duty - Stamp duty on buy-to-let property changed back in 2016, when a 3% surcharge was added. It’s important to be aware of the added cost when considering your options.
  • Surcharge liability - Surcharge liability applies to anyone who purchases an additional property.
  • Tax relief - The tax relief laws also changed in 2017. Previously, landlords could deduct interest paid on mortgage payments from their rental income (pre-tax). Now, interest can’t be deducted; instead all your interest payment qualifies for a standard 20% tax relief.