Overseas Inflow in UK Real Estate may escalate in No-Deal Brexit


Overseas Inflow in UK Real Estate may escalate in No-Deal Brexit

22 Feb 2019

The economic and political uncertainties during Brexit led to subdued real estate markets in some regions, but many analysts assume the volatility in sterling and low prices may lead to increase in the overseas investments following a period of inertia. Lambert Smith Hampton, a commercial property consultancy claim the northwest remained to be the hub where over £1billion was invested in the last quarter of 2018. Overseas inflow reached £8.1bn in the last quarter that was 16 percent above the 5-year quarterly average, where international funding reached £27.9billion, almost 33 percent higher than the 10-year average. Inflow in the Far East was £4.8 billion, in the fourth quarter. As the inflow of funds in the industrial assets is expected to increase, a drop in retail properties has been predicted by some experts at Avison Young’s team.  

Many property firms link the recent price decline in residential markets to the Brexit and the stamp duties, nevertheless, local buyers fear economic issues during the process of implementation of the deal but, in general, the property market is growing and foreign interests continue to increase in some of the key regions. The growth in population and the limited landmass where the regulations for no-construction in the green zones, resulting in only 2 percent of the landmass of the country to be used of real estate developments, led to shortage and unaffordability in some areas.  

North continues to grow strong

Brexit had a ripple effect on the economy where many home buyers are unable to take a decision; however, foreign interests in the northern properties are still strong. In 2016, record FDI net inflow was made of £145.6 billion. A year before, it was £25.3 billion. In 2017, global properties transactions were the second highest in the UK, next to the US. 

Northern England provides newer options distinguished due to low-interest rate and low pound rates. The rate of the sterling pound was 13 percent low against US dollar, since Brexit vote, and many foreign buyers are seizing deals at discounted rates. 

Buyers seek opportunities in northern cities Manchester, Leeds, and Liverpool

Manchester became the fastest growing cities of EU with the increase in the number of affordable properties where the inquiries by Chinese nationals in Manchester buy-to-let were 255.6 percent up in 2018 as compared to 2017. Many foreign property buyers are buying in Liverpool’s new regeneration projects. 

As per Juwai.com, the price in the city grew 5.3 percent in 2018 and inquiries increased 160 percent in January 2018. Although local buyers are speculating the pros and cons of such deals, foreign buyers may spend more in Britain properties, even, in the condition of a no-deal exit. The 2019 Knight Frank report claimed the United Kingdom remains to be one of the top investment destinations for the overseas buyers. The decline in pound seems to help property buyers, and if the prices decline as predicted by the Bank of England governor (by 35%), the global investors will find it a most lucrative destination as undersupply remains an advantage for a buy-to-let. 

To know more about UK properties, click Hamilton International Estates (www.hamiltoninternationalestates.com).

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