What will the Olympics mean for London property?
Tuesday, 8 February 2011 3:34 PM
With only 535 days to go until the London 2012 Olympics, the capital is frenziedly preparing for the influx of athletes, businesspeople and tourists the Games will bring. But how will it all affect the London property market?
This morning I went to a breakfast seminar where I hoped to discover exactly that. Nicholas Gill, chief executive of host company David Phillips (which supplies furniture to the property industry), kicked things off, discussing what we can learn from cities that have held previous Olympics.
According to Gill, between 500,000 and 900,000 visitors will descend upon London during the Games. However, he was keen to emphasise how difficult it is to predict such a figure, citing the wildly inaccurate estimates given by previous host cities.
The role of the Olympic Games as a "catalyst for long-term regeneration for London as a whole" was what Gill really wanted to focus on. He argued that the Games provided "an opportunity to showcase London to new global markets that have a half-formed view" of the city.
The implication was that, if the organisers pull the logistics off and don’t end up accidentally sending ticketholders to Shepherds Bush on a mislabelled bus, visitors from emerging economies like Russia, China and India will be keen to whip out their cheque books and boost the prime central London property market further.
Gill's exact words were that we should "put London in the shop window with regard to property" and encourage the "internationalisation of the market". The 64,000 planned residential units around Olympic Park will certainly need to be shown to as many potential investors as possible, though their East London location makes them unlikely to constitute a Chinese businessman's idea of the quintessential London abode.
Next up was Len Olender, director of Sportsworld, a specialist Olympics hospitality and sporting service that has worked on the Games for the past 15 years. He was keen to pick up where Gill left off in talking about the role of the Olympics as a "catalyst" in London's regeneration.
"The Games are like a train coming down the track towards us," he said. "The real opportunity does not only lie within those two or three weeks."
However, Olender also warned, "If something looks too good to be true, it probably is." Although he was referring to people acquiring services under false pretences (eg by pretending to be a sponsor), I think this could be applied to the Olympics as a whole.
Of course, London 2012 brings with it positive aspects. As Olender pointed out, other cities have benefitted greatly - for example, Athens redeveloped its airport and Barcelona enjoyed a meteoric leap into the number-one spot for European city breaks. In London, TFL will be working around the clock to show the city's public transport in its best (though probably still slightly grubby) light, and on a basic level it's good to see former wasteland being turned into much-needed housing.
The hope that the Games will bring instant wealth to a landlord, developer or neighbourhood, though, is ill-founded. Like Olender said, "I have never seen anyone get rich from the Olympic Games. If you want to do that, buy a lottery ticket."
While property in East London will be in demand from ticketholders during the Games, Olender argued that most foreign visitors would stay in the city centre - not least because many of them would not actually be going to more than one event, if any at all.
He seemed strangely reluctant to discuss people renting out individual properties (as opposed to serviced apartments or hotel rooms), saying that local residents would not fare well out of renting out their own homes to visitors because they weren't kitted-out well enough for paying guests.
Private rental properties based near Olympic Park will get booked, conceded Olender, but landlords must be careful not to price their properties out of the market: apparently, hotels and private properties alike are often left empty come Olympics time because the owners have overestimated the amount that visitors will be willing to pay for a room.
"You could probably charge up to 20 per cent above your usual rate," he said, but added that "anyone who tries to charge more than 25 per cent above the usual rate will have trouble".
On a practical level, Olender advised that anyone living or staying near the stadium should research access during the Games: "Access to your property might suddenly be restricted by the police. No one will tell you about this - you need to find out for yourself."
I came away from the meeting feeling the same as I had when I arrived: excited about the benefits that the Olympics will bring to London in terms of new homes, dreading the disruptions it will inevitably cause to residents' day-to-day lives and public transport, and very, very unsure about what will happen to East London after September 9, 2012.
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Ele Cooper
