Overseas Inflow in UK Real Estate May Escalate in No-Deal Brexit

Brexit's economic and political uncertainties led some regions to subdued real estate markets. Still, many analysts assume the volatility in sterling and low prices may lead to an increase in overseas investments following a period of inertia.

Lambert Smith Hampton, a commercial property consultancy, claims the northwest remained the hub where over £ 1 billion was invested in the last quarter of 2018. Overseas inflow reached £8.1bn in the last quarter, which was 16 per cent above the 5-year quarterly average.

Overseas inflow in the Far East was £4.8 billion in the fourth quarter. However, the inflow of funds in the industrial assets is expected to increase, whereas a drop in retail property has been predicted by some experts on Avison Young's team.  

Many property firms link the recent price decline in residential markets to 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 per cent of the landmass of the country being used for 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 could not decide; however, foreign interests in the northern property are still strong. In 2016, the record FDI net inflow was £145.6 billion. A year before, it was £25.3 billion. In 2017, global property transactions were the second highest in the UK, next to the US. 

Northern England provides newer options distinguished due to low-interest rates and low pound rates. The rate of the sterling pound was 13 per cent low against the US dollar since the 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 city in the EU with increased affordable properties. Chinese nationals in Manchester buy-to-let inquiries were 255.6 per cent up in 2018 compared to 2017. Many foreign property buyers are interested in Liverpool's new regeneration projects. 

As per Juwai.com, the price in the city grew 5.3 per cent in 2018, and inquiries increased 160 per cent in January 2018. Although local buyers are speculating the pros and cons of such deals, foreign buyers may spend more on Britain properties, even in the condition of a no-deal exit.

The 2019 Knight Frank report claimed the United Kingdom remains one of the top investment destinations for overseas buyers. The decline in the pound seems to help property buyers. However, global investors may find it the most lucrative destination if the prices drop, as predicted by the Bank of England governor (by almost 35%), as undersupply remains an advantage for the buy-to-let option. 

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