Investment Secrets in Croydon, London

Cross the river and discover one of London’s best-kept investment secrets in Croydon

In many locations across the globe, populations are urbanising at increasing levels, and ironically, the cities on the receiving end of that trend are decentralising. In the way Hong Kong’s so-called fringe areas’ lower rents are attracting major office occupiers, London’s property cycle is also at a decentralising stage for tenants not opting out of the capital altogether. As a result, the south side district of Croydon is ready to take it place on centre stage.

An Old Favourite

For Londoners, Croydon is no mystery. The city’s largest borough by population, at roughly 50,000 (over 170,000 counting all wards) has a long economic history. In fact, it’s the biggest business hub after the West End and Canary Wharf; many major multinationals have had offices there for decades. It’s also home to some of the best examples of Brutalist architecture in the world. So why does Croydon have to remind investors it’s there?

“Croydon had a very negative [image]. You couldn’t open a London or a national paper and see anything positive written about Croydon. That was very frustrating for the businesses that had invested in the borough,” begins the Develop Croydon Forum’s Bonnie Stephensmith. The non-profit community interest organisation has a mission to rehabilitate the perception of Croydon and let the world know what’s going on there — and what a strong investment case it makes. Founded in 2010 with eight partners during a recession (council help was not forthcoming), the DCF now counts 65 partners, including government, and considerable success. “It’s not just about development anymore. It’s communications, both internally and externally,” continues Stephensmith. “People just haven’t grasped the huge amount of change that’s happening.”

Stephensmith and Co are quick to point out what is perhaps Croydon’s greatest strength: its connectivity. Claiming to be the UK’s best-connected transport hub, Croydon is roughly 15 minutes to Victoria and central London, with trains departing every five minutes. “All the major transport interchanges are quick and easy to get to and equally quick to get out. That’s a key selling point and [a reason] a lot of people are choosing to head south,” says Stephensmith. For professionals also seeking a touch of lifestyle, Croydon is 30 minutes from Surrey Downs, Brighton Beach, and 28 parks.

The massive changes in Croydon may have begun with community efforts to get attention, but they are continuing with a £5.25 billion regeneration programme in the town centre — three times the size of the Olympic Park project — that includes infrastructure upgrades, urban beautification, revitalising outdated office buildings (thanks to relaxed planning rules) and converting many to residential space. “Croydon has never been a living city, so to speak. It’s been a place people work, which has meant the nighttime economy has been poor. With people moving in it’s becoming a living place: schools, parks, public real improvements are all taking pace. We’re seeing growth in restaurants and bars, so generally the whole leisure offer is changing to support that,” says Stephensmith.

Southern Living

Many of those new residents will be working with the area’s traditional employers (Allianz, AIG, Mott MacDonald), as well as new residents Arcadis, The Body Shop, and HMRC, or with a start-up in Croydon Tech City — the Silicon Valley of South London. Tech firms are moving out of overpriced, supply-constrained Shoreditch and taking up space in Croydon, along with scores of other central London businesses, attracted by Grade A, new build office space that costs half of what it does in the City.

To serve those workers, the city has plans for over 8,000 new homes by 2031 in the town centre, among them projects by Berkeley (Saffron Square), Regency Homes (Island) and Barratt London (St Michael’s Square) as a start. Future residents will have plenty of retail options once Westfield opens the doors of its third London store in 2020.

“When that happened it really brought forward the confidence … for several stalled sites. There is new build outside East Croydon station now, in space that had been redundant, empty space for many years and which gave a very bad impression of Croydon,” theorises Stephensmith. New offices and mixed-use developments, Menta’s Morello and Stanhope’s Ruskin Square, now bracket the station.

Currently, home prices in Croydon average approximately £650 per square foot, compared to double that — often more — in other parts of London. “Already we’ve seen growth in those values. When Saffron Square started building three years ago prices were about £450 per square foot. That can only continue, but we’re still very affordable comparatively.” An added bonus is rental yields above 4% for one and two-bedroom flats, among the best in London.

Croydon offers an alternative for investors looking for greater value without having to leave London. Indeed, “One of the things we’re trying to get across is that Croydon is London,” finishes Stephensmith. “It’s the best of the capital, the coast and the country.”

Know more about Croydon new development - Fifteen Lansdowne

More choices of International Property Investment