Why the UK is a Leading International Investment Target in 2019
Despite the uncertainty that comes with an event like Brexit, the UK looks set to reclaim its position as a leading international investment target for international buyers in 2019.
In a recent survey by Knight Frank of 155 leading property investors, 21% of the respondents said the UK was their preferred investment market, up from 11% the year before. The SevenCapital 2019 Brexit Survey discovered a similarly positive sentiment, with 69% of the 450 respondents still investing in the UK market despite Brexit.
This is excellent news for a market that remains robust despite the political shifts over the last two years. The UK is still recognised as a strong overseas investment target, with the primary reasons for investing in the UK being potential rental yields (43%) followed by its stability (32%).
As regional cores continue to drive excellent rental yields across the country, more affordable opportunities in cities such as Birmingham are keeping investors interested, particularly the European market. The West Midlands as a whole saw the highest amount of foreign direct investment (FDI) in the country, with Birmingham sitting at the heart of the area as its foundation.
Chris Bell, European Managing Director at Knight Frank, believes: “There is a huge weight of capital to be allocated to European real estate… the question is where it will be deployed.
“Opportunistic investors will be looking at emerging asset classes and peripheral locations to generate returns… in this context the emergence of the UK as the European market of choice in 2019 is interesting, suggesting many think that the pricing looks attractive.”
European buyers were the most dominant investing demographic in Central London during Q3 of 2018, making up 40% of the overall market. This is set to continue across the entire UK, with a third of those investors predicting the demand for UK assets rising positively in the long-term.
For emerging markets, rising demand and undersupply highlights a much more pressing issue. While economic growth is strong in areas such as Oxfordshire, the West Midlands and the North, residential undersupply is a huge issue plaguing the entire country. Over half of the surveyed investors (55%) in Knight Frank’s research identified their main challenge as ‘lack of stock’ when investing in the UK, with only 15% citing geo-political uncertainty as a constraint.
With over a third of the same respondents (36%) believing that UK demand will increase and nearly a quarter (23%) believing it will stay the same, the majority of investors are expecting a much more competitive market going forward as undersupply makes premium property lucrative.
This demand isn’t just coming from Europe either. The SevenCapital Survey picked out other hotspots including South Africa (SA), Hong Kong and the UAE. Brexit seems to have had a positive effect on South African investors, with 26% of the SA respondents in the survey choosing to invest in the UK since Brexit was triggered.
For Hong Kong investors, only 5% consider Brexit as the most critical factor in their decision to invest, preferring to look at the potential for ROI (53%) and strength of the market (43%).
Dubai investors follow a similar pattern, mainly focusing on a good exchange rate (33%), a stable market (30%) and affordability (29%). Nearly 1 in 7 UAE investors have chosen to invest in UK property since the triggering of Brexit, showing the confidence many have in the strength of the UK market.
These statistics all demonstrate the strength of the UK’s investment potential right now. Despite the uncertainty that comes with Brexit, the opportunities available are still attractive, particularly in regions that are driving new investment and redevelopment.
SevenCapital has a number of high-profile opportunities in emerging markets including Birmingham, Oxfordshire and the London Commuter Belt. Designed for a range of different investors, all of our developments are sophisticated, well-designed and chosen to deliver excellent returns on investment.