Brexit... we're still talking about it! But with a leave date for the 31st October looking optimistic (compare to the original date all those months ago), we're starting to see more clarity in the effect that Brexit is having on the property market - and the investment sector - in particular. One of the major ways property investment trends have changed in the past dew years is the surge we have seen from international investors - particularly those in the United Arab Emirates.
This surge in overseas investment has been put down, mainly, to the falling pound rates and the effect this has had on making property in the UK incredibly affordable for international investors. At the end of July 2019, the pound hit a 28-month low against the dollar ($USD), coinciding with the appointment of new Prime Minister Boris Johnson; who has made it clear that the UK government are actively preparing for Brexit at the end of October whether a deal is made or not.
With the low rate of the British Pound against other currencies, many overseas investors have realised that property has never been more affordable in the UK. Already this year we have seen a spike in demand from investors from the United Arab Emirates, Hong Kong and China. The Telegraph recently published the top ten countries where investors were looking at getting a mortgage for a buy-to-let property in the UK, which included: UAE, Singapore, Hong Kong, USA, Switzerland, China, Saudi Arabia, Qatar, Canada and New Zealand.
"... Domestic UK assets are starting to look quite cheap relative to elsewhere [globally]," said Legal and General Investment Management's head of economics, Tim Drayson, to Reuters last month. "Everyone's joking it's a brave decision to do it... As is always the case, if the disconnect continues to widen, it will be worth the risk."
The National described now as an unmissable opportunity for investors, particularly from the United Arab Emirates, to invest in UK property, especially in the capital. In May this year, house prices in London has fell 4.4%, the largest drop in value since August 2009 when they fell 7%, according to the Office for National Statistics.
The falling rate of the pound has only added to this value that can now be found in the capital for international investors. For example, a London property purchased for £500,000 the day before the EU referendum (22nd June 2016) would set you back $735,294. Today, however, that same property (assuming it is still worth £500,000) would only cost you $621,300 - a saving of over $100,000 - purely affected by exchange rates!
"International property investors trust the UK for its strength and stability, Brexit shouldn't tarnish this reputation in the long-term" - The Telegraph
International investors are also taking advantage with the beneficial exchange rates while the supply of UK accommodation is lacking, compared to the demand. The government has set a target of 300,000 new homes to be built in the Uk each year by mid-2020, however for this supply to actually be met construction needs to rise by 25% based off what it is achieving right now.