Overseas ownership of UK property stands at record levels. Indeed, according to latest estimates from British political think tank, the Bow Group, foreign owners now account for close to 10% of the UK’s housing stock. It’s testament to the enduring appeal of British bricks and mortar and a strong belief in the resilience of the UK economy, which continues to perform strongly despite the much publicised Brexit vote. Much is made of ultra-high net worth individuals and sovereign wealth funds from around the globe snapping up prime real estate in the most sought-after areas of London, but what’s the reality at the more affordable end of the market, both in London and beyond?
UK developers typically cater to both domestic and overseas investors but with Sterling currently fluctuating around record lows, more and more are targeting overseas buyers looking to take advantage of the myriad benefits of investing in the UK now. For our part, broadly half of our clients are based overseas. The UK has long enjoyed global appeal when it comes to property but we continue to see the greatest demand from the Gulf region – notably Dubai, Kuwait and Qatar and further east, from Hong Kong and Singapore. Within these markets there is typically a split of both local and expatriate custom. Naturally, British expats already have a strong understanding of the UK property scene and typically look to make investments with a view to potentially returning back to the UK at some point, perhaps when a work assignment has finished. However, in our experience, there is no less awareness of or appetite for the British market among local native investors.
This is especially the case among Hong Kong and Singapore buyers, who are all too aware of the UK’s credentials and readily prepared to purchase off-plan, especially when there is only limited scope for investing in their own rapidly overheating markets. Many already have direct experience of working in Britain or using the nation’s highly respected education system. There’s also a strong respect for the UK’s robust legal framework and world-leading financial services industry, which can provide a ready-made and trusted source of finance in transactions.
Rise in Regional Investment
While it is widely accepted that the scale of foreign investment in residential property is lower outside of the capital, that position is changing rapidly. Educated investors are well aware of the massive levels of interest in London property and the resulting reduction in buying opportunities and indeed rental yields. As such, they are increasingly turning their attention to the fringes of London and northwards to Birmingham and beyond, where there is a dramatic improvement in affordability alongside a compelling quality of life offering.
It’s a trend that is only likely to continue, notably among Chinese investors who have a particularly strong appetite for the UK’s regions. In 2014, Chinese outbound investment into residential and commercial property was estimated at more than $50bn (£38bn). That is a figure that could well end up doubling or trebling over the next decade as investors see the immense value beyond the bright lights of Britain’s biggest city.
For more information on property investment in the UK, view our investment guides here.