For international investors looking to gain exposure in overseas markets, it can be difficult to decide where to invest. The UK property market has seen some mixed headlines over the last few years and so this week I’ve decided to write an overview of the UK property market as it stands right now to help overseas investors decide if the UK is a market that will suit you and your portfolio.
UK Market Snapshot
The UK has long been favoured by overseas investors looking to invest in property due to its favourable exchange rates and consistent capital growth.
In my opinion, looking to the UK for property investment opportunities makes sound economic sense. The UK property market provides stable, liquid and lucrative investment opportunities that are likely to appreciate over a number of years in terms of both income and capital growth, and are protected by the country’s robust legal system.
The UK’s diverse, modern and growing economy, as well as its rising population, means that demand for high-quality homes, offices, hotels, retail units, student accommodation, and industrial space is high and provides significant opportunities for informed property investors.
While the market has fluctuated in recent years, historically, the long-term trend in the UK property market has always been up.
Of course, exchange rates also play an important role in investment decision making and for the most part, the last three years have been kind to international investors looking to invest in the United Kingdom compared to historical averages. The chart below shows an index of various currencies’ exchange rates to the pound over the last 10 years. As you can see, compared with five years ago, investors in the UAE get a huge 33% more for their money, Euro investors 10% more, Hong Kong investors 32% and Singapore 22%.
Source: OFX
London or elsewhere?
London’s attraction as a location for investing has always been high and remains so right now, despite political uncertainty in the UK. The City of London continues to dominate the European tech sector and office rents are rising again due to very low vacancy rates. London’s enduring attraction lies in its green spaces, vibrant culture and entertainment scene and position as a global centre for finance, education, and business.
Over the last few years, however, it is the UK’s regional cities that have grown into investment hotspots, often offering higher yields for income-focussed investors. I recently wrote another articleon exactly this topic, looking at how cities like Birmingham, Manchester and Leeds are flourishing. In Birmingham, for example, house prices have risen faster than any other UK region and the population is expected to grow by 200,000 people over the next 20 years. Some regional cities are also set to benefit from HS2 which when it begins operating in 2026 will significantly speed up travel time to London.
What returns can you expect?
Of course, this depends on where and what you invest in but typical yields currently sit at around 5-6% for purpose-built student accommodation, 4-4.25% for prime office buildings in London and 4-5% for buy-to-let.
With our UK based operation and team, ambT Property Partners has the local market knowledge, connections and know-how to support international investors with UK property investments. We have built up an extensive network of highly regarded industry support professionals, which we use to assemble project due diligence teams. We can manage or assist in the acquisition and/or development process to ensure that our clients receive best in class professional advice from deal origination through to completion. To see all our open investment opportunities join our Investors Club where members receive early access to the details of all our new and current opportunities.
