UK remains foreign investment favourite for property
Foreign investors are choosing British soil for property over fellow investment opportunities in Europe and the rest of the world. Towards the end of 2017, Asian investors alone poured £14 billion into property deals in Europe, and out of the total investment from overseas, the UK capital received 69 deals in comparison to just 19 in Paris and 12 in Frankfurt.
But why are investors from abroad heading to the UK instead of other destinations? Well, there are a number of definitive characteristics evident in Britain’s property sector which make it attractive to both home and away investors despite its recent departure out of the EU.
Firstly, the UK population is experiencing massive growth rates. In 2016, it reached a peak of 65.6 million and is predicted to grow to over 74 million by 2039. This significant increase in residents is powering tenant demand across the British Isles, and international investors are aware that buy to let residential properties will benefit most from the vast amounts of people requiring accommodation.
The latest news also suggests that young people will rent for longer durations as rising house prices make it more difficult to get onto the property ladder. UK individuals born in the ‘millennial’ years now face a future of renting which increases the potential for property in sought after areas.
What’s more, not only highly populated but also more crowded than any EU country, a population density that squeezes 402 people into every square kilometre is putting pressure on UK households. These UK population statistics have more of an impact on property when viewed in relation to the available housing stock.
A current undersupply of housing across the nation is what puts British buy to let property on every investor’s ‘to-do’ list. Tenant demand is strong for both student and residential properties, with only a quarter of students having access to purpose-built student accommodation, because there simply isn’t enough stock on the market.
Consequently, rental yields are being pushed up to excessive heights. RWinvest note that ‘Yields can often reach as high as 7%’ in some UK hotspot areas. A unique situation where the properties available to let are limited means rents can be increased and higher rental returns can then be assured for the investor.
Following on from this, both the political and economic stability of the UK pulls overseas investors onto its property shores. The UK is renowned for its long-standing and solid interest in property, and the government make certain that adequate funds are being dedicated to bridging the wide gap between demand and supply.
Additionally, internal investments into regeneration projects in skills, transport and culture are helping to raise the UK’s profile as the epitome of stable economic growth. Economies are growing by billions year on year and investors can lap up the potential for capital appreciation in particular locations of interest.
On top of population growth, an undersupply of housing, great rental yields and economic stability, the UK sector boasts experience that some countries just don’t have, and foreign investors appeal to familiar territory when embarking on buy to let property journeys.
Kindly shared by Property Division