Why Invest in UK Property?

Whilst Brexit and recent tax and lending rules enforced by the Government have caused a few ripples of uncertainty amongst property investors on a national and international scale, the sentiment remains – the UK is a good place to invest in property.

Top European City for Property Investment

Britain’s ongoing appeal to investors on a worldwide scale has remained resilient, with London retaining a top spot in Schroders’ latest Global Cities 30 index, listed as the third best city in the world to invest in property. Paris is the only other European city to make the top 30, making London still the hotspot in Europe.

 

Top for Foreign Direct Investment

Paying further testament to the UK’s appeal, in 2016 alone, notably the year of the Brexit vote, Britain hit a record high for foreign direct investment (FDI), with net flows jumping to £145.6billion from £25.3billion in the previous year – according to Reuters, this was the largest value recorded for a year since comparable data began to be compiled in 2006.

In the first half of 2017, 14% of global commercial property investment transactions occurred in the UK, second only to the USA*.

 

Investment in Infrastructure

In the coming years the significant investment made into infrastructure projects in the UK will begin to bear fruit, and are set to dramatically change and improve connectivity, house prices and employment across many parts of the UK.

Crossrail is set to be a game changer in the South East for access in and out of London, and since its launch in 2009 has seen house prices within a one mile radius of its planned stations increase in value by 66% on average.

HS2, a £56 billion project which will connect eight major cities between the Midlands, the North and London, is projected to create around 25,000 jobs by the time it arrives on 2026, and fuel economic benefits worth over £103 billion to the UK.

Regeneration

Regional UK cities such as Birmingham, Manchester and Leeds are currently flourishing. With London prices having increased enormously, investors have in recent years started to look outside the Capital at alternative options for more fruitful returns. And with improved infrastructure making its way towards these cities, such as HS2, as a result major regeneration is taking place.

Birmingham alone has, in the past decade, undergone a complete transformation, with the £500million redevelopment of its New Street station and £150million Grand Central shopping destination, major developments such as Paradise and Arena Central underway, and a planned £1billion regeneration scheme in anticipation of the arrival of HS2 in 2026.

Employment

With inward investment, improvements to infrastructure and regeneration comes employment. As such employment rates have continued to grow in the UK. By the end of 2017 the proportion of people employed in the UK had reached 75.3%, up from 74.5% the previous year and the joint highest since comparable records began in 1971. In actual numbers, this means 415,000 more people employed since 2016.**

 

Educational Credentials

Of the top 100 universities in the world, 16 are in the UK. Cambridge, Oxford, University College London and Imperial College London all make the top ten, with universities in key regional cities of Manchester, Edinburgh, Sheffield, Nottingham and Birmingham all making the top 100.

 

Supply versus Demand

As a result of regeneration, jobs and investment, there has been a resurgence of people looking to live and work in the regional cities across the UK, such as Birmingham, Manchester, Leeds and Liverpool. So demand for homes is high, and it’s increasing at a faster rate than the supply.

 

House Price Growth

Latest reports show that house prices are still increasing. Whilst London is stagnating, having already reached its peak, the high prices are forcing people out into the rest of the UK, increasing demand in regional cities and as a result pushing up the prices. Recent reports from Hometrack have shown growth in Edinburgh, Birmingham, Manchester and Glasgow surpass 7% year on year, with the UK as a whole achieving 4.4% growth on average.

As a property investor, all of this means there is still significant potential for capital growth and good rental yields. The UK is still growing, despite the uncertainty surrounding Brexit, and whilst there has been a shift in focus on residential property in the Capital in recent years, cities and areas of the UK that may once have been overlooked now present very lucrative opportunities.

* Source: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/663666/170926_UK_Invest_BROCHURE__A5__04_ACCESSIBLE.pdf

** Source: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/january2018

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