In the past decade, the concept of smart cities has emerged as a pivotal force that led to transformative change and innovation across cities and sectors, including real estate. It’s clear that technology plays a huge role in uplifting the lives of people - and the city of London is bent on taking advantage of this.
Through the Smarter London Together initiative, Mayor Sadiq Khan has set a plan in motion to spearhead the smart city movement that could hopefully inspire the rest of the world to emulate. With London being the “tech capital in Europe,” the city is planning to use its existing capabilities to open opportunities that will strengthen and transform it into becoming the smartest city in the world.
As the roadmap for the smart city continues to progress, property investors are presented with a great opportunity to capitalise on the forward-thinking initiatives of the city.
In this article, you’ll get a glimpse of London’s smart city initiatives and how you can support and take advantage of the opportunity to get a higher return on investment for your portfolio.
A Look at London’s Smart City Initiatives
The smart city initiatives of London will open doors for massive urban development that focuses on innovation and sustainability. In his statements, Mayor Khan wants the initiatives to centre on the needs of Londoners. His goal is to address the challenges of urban living through data-driven solutions and the transformative power of technology.
The vision to create a Smarter London Together is not meant to be a rigid masterplan. It will adopt a flexible approach that’s meant to react to the evolving interaction between the city government, residents, data and technology. The creation of the initiative involved a Listening Tour and public meetings so project leaders could communicate with Londoners to get a feel of what they need.
As a result of the consultations, the final roadmap includes 5 key missions.
More user-designed services
The smart city agenda of London prioritises the needs of citizens first. It will take into consideration the diverse cultures and backgrounds of the residents. Instead of rushing to integrate new technologies, it seeks out what Londoners need. This ensures that the technologies that will be rolled out throughout the city provide concrete solutions that will enrich and empower London residents.
This inclusive approach will lead to the creation of civic platforms and encourage startups that address the most pressing issues in the city.
Better city data
A smart city treats data as an infrastructure that’s just as important as roads, energy networks and public transport. Data should be set up strategically through policies and proper resource allocation to ensure efficient delivery of information.
Data analytics is crucial in identifying urban trends, areas for improvement and the impact of interventions. It leads to the city’s growth and ability to match the needs of the citizens.
The smart city initiative seeks to collaborate with partners to increase data sharing through the London Office for Data Analytics (LODA), establish a wider cyber security strategy, set up clearer data rights and accountability and increase transparency and innovation across public services. Among the important data that will be managed includes the names and identification of city buildings, fixtures (e.g. lampposts) and open spaces (e.g. parks).
Improve connectivity and smarter streets
London is also committed to enhancing connectivity and promoting sustainable options for transportation. This will support the city-data initiatives and expedite developments and public works. Not only that, but this can also support flexible working conditions to attract businesses and travellers into the city. It’ll lead to a city that’s safer, cleaner and liveable.
This can be done through the city’s current 5G projects, full fibre connectivity, public wifi access and smart infrastructures.
Elevate digital leadership and skills
Investing in digital literacy helps cultivate a culture of innovation across different sectors functioning within the city. This equips both citizens and businesses so they can unlock new opportunities that will fuel their growth and profitability.
The smart city initiative will focus on growing a workforce who can capitalise on their digital literacy skills to transform the city, specifically in the areas of cyber security and data leadership. This will be done through a digital talent pipeline and cultural institutions - among others.
Develop city-wide collaboration
Finally, the smart city program encourages city-wide collaboration including government agencies, academic institutions, private sectors and community organisations. This will harness the collective expertise and resources of everyone to efficiently solve complex urban challenges.
This mission will work on establishing a new function called the London Office of Technology & Innovation (LOTI), promoting MedTech innovation, exploring new partnerships within the tech sector, supporting the GLA or Greater London Authority’s digital delivery and collaborating with other UK cities.
Different Ways Smart Cities Improve Property Returns
As London embraces the initiative to become the smartest city, property investors should consider how this will affect the property market. When you fully understand the transformation that happens within smart cities, you’ll appreciate the opportunities that it will bring. It can uplift the lives of citizens and attract more people to live in the city. As the population grows, the need for property and dwelling places starts to rise.
This is the opportunity that property investors should look out for. Look at the different ways smart cities can revolutionise your portfolio’s growth.
Improved quality of living
The primary goal of smart cities is to enhance the quality of life for its residents. It focuses on safety, convenience and sustainability. It uses smart infrastructure, integrated community spaces and energy-efficient buildings to create a vibrant and livable neighbourhood.
The appeal is more than just being digitally or technologically advanced. It’s about using modern and sustainable solutions to meet the specific needs of the community.
This translates to a higher appeal and desirability which in turn will increase the demand for residential properties. For property investors, that means getting higher rental yields and better property growth.
New investment opportunities
The desirability of smart cities leads to population growth. This represents a growing market that investors would want to capitalise on. The smart infrastructure projects on their own will attract businesses and investors. It will lead to more money pouring into the city and its workforce.
This will start a chain of urban growth fueled by data and technology. If you can stay attuned to these developments, you can improve your properties so it’s aligned with the preferences of emerging markets. For instance, you can equip your properties to have IoT sensors, smart home technology and energy management systems. Or you can focus on attracting a specific tenant market for your properties.
If you can align your portfolio with the smart city’s growth, it can significantly increase your investment returns.
Better infrastructure
One of the focus areas of smart cities is infrastructure. It’s designed to improve connectivity and accessibility. The increased mobility results in higher productivity and greater convenience for residents. This attracts more investments which improves the attractiveness and value of the properties within and around smart cities.
The greater the proximity to smart infrastructure hubs, the greater the value of a property. It can increase tenant demand and drive rental yields higher.
Higher property values
Smart city initiatives provide better infrastructures and improve the quality of living which in turn increases the appeal among residents. People who want an upgrade in their standard of living would want to relocate to smart cities - or at least, even in the neighbourhoods surrounding it. The higher appeal will translate to higher property values as more people will look for properties to buy or rent.
This won’t just affect the value of your portfolio. It can also increase rental prices.
Greater profit potential
The increase in profit potential from smart cities comes in three ways.
The first is through new investments. Smart cities attract new investments and that means new businesses will open. Property investors can consider transforming their assets into commercial properties for rent.
The second is through an increase in residential rental prices. As people migrate to smart cities for a better way of living, the demand for rental properties will rise. This will put pressure on rental prices and the increase that results from that will create better yields for property investors.
The third is through the increase in property values. This will lead to greater capital gains for a property investor’s portfolio. They can leverage this to fund investments and create other sources of income.
Tips to Support London’s Smart City Initiatives
As the city of London continues its journey to become a leader in smart urban development, it’s time for property investors to position themselves to benefit from it. You are in a position to contribute to the emergence of smart cities by focusing on transforming your respective real estate assets.
Here are strategic approaches that you can use to align your investment strategies with the principles of smart cities.
Conduct thorough research
Smart cities open several areas for property investors to grow. Do your research to understand which area can expand your portfolio more. Research areas in the city that will receive the most development and see how you can acquire assets there.
You can also focus on existing assets that you have and decide how you can improve them to align with the smart city initiatives. Look for emerging trends that can increase the value of your property further and make it stand out in the competitive rental property market in London.
Choose new investments wisely
Once you’ve done your research, it’s time to choose the best areas to invest in. Prioritise areas that are expected to get the most infrastructure developments in the coming years. You should also look at improvements done to each neighbourhood. This includes high-speed Internet connectivity, energy-efficient structures, green spaces and smart transportation systems.
If there are no available or affordable assets within smart cities, look at the surrounding areas. As long as your property is located in a neighbourhood that’s connected to smart cities through transportation systems, it’ll still be appealing to tenants.
Stay compliant
Ensuring compliance is one way to protect your property investments. It’ll also ensure that your profits won’t be compromised by penalties and fees.
Make this a part of your research before investing in properties. Smart cities usually include new laws and regulations to protect the improvements done. You need to ensure that your property is compliant with all regulations. Follow energy efficiency standards and new building codes. Get certifications to prove that you’re compliant with the new building practices. This will allow you to contribute to the overall initiatives of the smart city project.
Diversify portfolios
As you choose areas to invest in, don’t forget to keep your portfolio diversified. This will allow you to mitigate risks and protect your portfolio from the ever-changing real estate market. Spread your investments across different neighbourhoods and property types. You can also target different tenant markets like business travellers, students, etc.
Choosing multiple investment opportunities will lead to long-term growth potential that’s flexible enough to meet the evolving demands of London’s rental market.
Contribute to London’s Smart City Plans
As London continues to reach its smart city goals, property investors are presented with a great opportunity to ride the wave of growth that it’ll bring. The innovation and sustainability initiatives being implemented will lead to higher investment returns.
Of course, waiting for the smart city project to materialise requires a collective effort from everyone. Start working on your real estate assets to ensure compliance. Make them as sustainable and energy-efficient as possible. Install smart home technology complete with high-speed connection and Wi-Fi.
By aligning your investment strategies with the smart city developments in London, you can contribute to building a brighter future for a smart urban landscape.
If you’d like to know how you can play an integral role in London’s smart city initiatives, partner with a forward-thinking property management company like Opago. We are equally committed to the development of a smarter city. Together, we can contribute to enhancing the quality of life of residents through better rental properties.
Contact us so we can help you achieve your investment goals.
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