While the political and economic turmoil is an ongoing headache for those living in the UK, for
international investors with money to spend, the chaotic scenes in Westminster and weakened pound have only enhanced the attractiveness of UK property. Although Brexit deadlock has stalled progress in some sectors, international investment volumes in the UK property market continue to rise, highlighting the timeless appeal of this lucrative asset class.
Overseas Investment in UK property developments soars
In the aftermath of the 2016 EU referendum, international investment volumes in the UK property market surprised many and showed that despite the political uncertainty, the UK was set to remain a favourite destination for global capital.
Figures show that in the first half of 2017, the UK accounted for 14 percent of all the global
commercial property investment transactions, second only to the US. In the multifamily residential sector, investment volumes increased dramatically, up by more than 150 percent to a high of $7.6 billion in 2018. In central London, 79 percent of the real estate acquisitions were made by international investors. This growth is set to continue in 2019, with overall investments in UK commercial property predicted to be around £55 billion.
Why has UK property remained so attractive?
The fact that international confidence in UK real estate has remained so strong shows that overseas investors are looking past Brexit uncertainty and taking a long-term view.
The weakening pound that accompanied the UK’s decision to leave the EU has certainly played its part. With the value of the pound taking a downwards trajectory from June 2016, international buyers have found themselves with increasing buying power. Many investors have taken this opportunity to acquire UK property before the pound strengthens, which is likely to happen if/when a deal to leave the EU is done.
There’s also a limited supply of prime assets in key locations, such as the central London office market. This ongoing demand for quality assets in a tight market has persuaded many international investors to buy now rather than waiting to see what the outcome of Brexit will be.
Investors are looking beyond the capital
Although there’s been little change in the demand for UK property, investors have been rethinking their strategies. While London remains one of the favourite destinations for overseas property investors, stagnating prices and high demand have inspired many investors to explore opportunities in property markets beyond the capital.
Cities in the Northern Powerhouse, such as Liverpool, Manchester, Newcastle and Leeds, have all climbed the rankings to become property investment hotspots. Research from Ernst & Young has found that these cities have attracted some of the highest levels of foreign direct investment of any outside of London.
As a result of this foreign investment, property prices in many regions of northern England are among some of the fastest-growing in the country. In Manchester, house prices rose by nearly 9 percent in the 12 months to July 2018. That has attracted strong interest from foreign buyers, with buy-to-let enquiries from Chinese investors up by 255 percent in January 2018 when compared with the same month in 2017.
Opportunities for foreign investors to diversify
The northern cities are providing foreign investors with an opportunity to diversify their portfolios. New developments are springing up to cater for the growing demand in property. These cities are also home to large student populations, giving investors the opportunity to enter the lucrative student-let market. Purpose-Built Student Accommodation (PBSA) has become highly sought-after by foreign investors, with overseas investors accounting for 55 percent of all transactions in 2018.
Prices in these cities also tend to be lower than those in London, while rental yields and capital
appreciation is expected to be stronger. This is backed by a trend of large regeneration projects and investment in transport and infrastructure. These are just a few of the factors luring overseas buyers away from the traditional property investment hotbeds in the south.
The Timeless Appeal of UK property
The international investment volumes we’re seeing during a period of such political uncertainty show that, in the long-term, UK property has a lasting appeal. It offers a promising indication of what investors can expect after Brexit and highlights exactly why UK property is such an attractive investment class.
High-Yield UK Property Investments
At Wealthmans, we offer a range of alternative UK property investment opportunities that are
available immediately. Property bonds and loan notes can provide greater returns than buy-to-let investments without the hassle of managing and maintaining the property. These types of investments are not available to retail investors. In order to qualify as a suitable investor you must be either a high net-worth individual or a sophisticated investor. Suitably qualified investors must first register on our registration page. You will them be granted access to our Investor Lounge.