Bust or Boom? Who is Profiting in Property During the London Olympics?

With only two weeks to go, the Olympics are filling the news and the hearts of people around the globe. Stories of huge profits being made by temporarily inflated properties and hotels are filling internet and economic commentators’ pages.

HomeAway, a popular holiday rental website, have reported booking enquiries for July and August are up by 695% compared to the same period last year. With the old adage “If it sounds too good to be true, it probably is” ringing in my ear, I decided to do some research on the benefits and traps of investing in property surrounding a big event.

Well, it turns out that many of these stories are true. Many different sources from holiday & property websites to the Economist newspaper have reported both huge investment and healthy returns on rental property in this time. The clear winner in this climate has been luxury, short-term rentals either close to the action or in fashionable, residential suburbs such as Chelsea and Notting Hill. These are being leased from £1,000 per week for a luxury apartment or small house to a reported £30,000 per week for the ultimate in home-style luxury retreats.

In addition, more than £1.4 billion has been invested in the previously dilapidated city of Stratford to give it a facelift that has been sorely needed for decades. Developers have built brightly coloured blocks of luxury apartments and the planning doesn’t stop there. After the Olympics, it will get a boost of £147 million to build 11,000 homes and offices as well as refitting the Olympic Village for rental homes.

It is not all good news, however. Due to the economic instability of the European Union, the muddy waters of Olympic investment are even harder to predict. From forum chatter to expert opinion, no-one agrees on the situation. The Olympics have a mixed history in creating a housing boom or draining cities of resources needed elsewhere. In addition the increased unemployment could mean the bottom could drop out of the market in the next six months as predicted by property group Knight Frank.

Where, then, do the opportunities lie? If you keep to these boundaries, you could be surprised at what you can achieve.

Plan Your Buying Strategy

Ideally, investing in property well before the event would provide the best returns. In Perth, savvy investors bought up central, self-contained apartments before the Commonwealth Heads of Government Meeting (CHoGM) and a significant return was made on many of these. There were others, however, that lost out because they bought too late or were buying in complexes that were not bidding to provide accommodation for the delegates. Make sure you have a strategy when buying and be clear on why you are buying.

Make Sure You Know Your Stuff

Researching which will have short-term and long-term growth is necessary. Some of these luxury apartments will undoubtedly be superfluous as tourism returns to pre-Olympic levels. In contrast, mid-level apartments in residential or recently developed suburbs can expand. As always, make sure your research includes talking to people from the area and not just developers. 

Anticipate a Post-Olympic Drop

This can actually work in your favour and in some places will be inevitable anyway. If the predictions say that the bottom will drop out of the market, then waiting until that time to invest could put you in front. Whilst the Olympics will have created a temporary boom, if you have prepared for afterwards and know what other investors are planning, you can strategise appropriately. This could be a risky market for some, but for those with the confidence and the right advice, a profit is there to be made. Keep your eyes on the long-term investment and use short-term windfalls to reduce existing debt or reinvest in areas that may be improving.

Get Help

Finally, use registered professionals in your area and the area you hope to buy. There are specialist lawyers and brokers who can help you invest in the United Kingdom with far less risk than doing it on your own. They know the law and appeals you can make if deals go south or vendors are being difficult. If possible, either visit the prospective unit yourself or have a buyer’s agent look through it for you with a solid brief. Any money you might save by doing it yourself really is outweighed by the risk you take trying to do it yourself.