Poll suggests Britain is now the top hotspot of UK and overseas property investors.
- 23% of UK property investors say Brexit is their reason for investing
- Over half expect market to remain 'good to very strong' over the next 18 months
- UK is set to be the main target for global commercial property investors in 2019
Original article by This Is Money, 04/03/2019
Four out of five property investors based in Hong Kong, Dubai, South Africa and the UK are still investing in Britain real estate, research claims, with a quarter of UK-based investors suggesting Brexit is their reason for doing so.
A poll of 450 high net worth investors based in these four countries indicated that 85% of those invested in either residential or commercial property were still keen on the asset class and looking for new investment opportunities in Britain. The cost of buying British property has been pulled down since the Brexit vote by the fall in the pound, however, a tax crackdown has made it more expensive.
Over a fifth of European investors say the UK as their preferred investment market
The poll carried out by Censuswide, albeit for a property developer Seven Capital, also asked overseas investors how strong they believe the UK's property market will be in the next 18 months. Just over half - 55% - estimate the UK property market to be 'good to very strong' with that figure rising to 64% when considering prospects in three to five years' time.
Andy Foote, director at Seven Capital said: "These figures demonstrate that people generally recognise that there are bigger factors to consider over Brexit when it comes to the overall trends in the UK property market. Realistically, it's the fear and the perception of Brexit that will have any effect, rather than the physical act of leaving the EU.
"Ultimately, if the market were to take a dip after Brexit, seasoned investors will know that this would more likely be a catalyst for the inevitable swing back."
It comes following several gloomy sets of data released recently, which suggest the UK's property market is grinding slowly to a halt. A recent survey from the Royal Institution of Chartered Surveyors found that levels of home sales and enquiries fell in January with 'little prospect' of a turnaround in the near future.
London and the South East of England have been hit hardest by the slowdown, while nationally the market is hampered by hesitancy over Brexit, the research found.
Meanwhile, over the course of 2018, house prices across the country rose by an average of just 1.02%, according to Zoopla, compared to 5.4% in 2017. And in September last year, Bank of England governor Mark Carney told mortgage lenders to stress borrowers' affordability based on house prices plummeting 30% if no deal is reached on Brexit.
While Carney's consideration was for the stability of the banking system in an absolute worst-case scenario, clearly a fall in property values is a genuine concern for the market as the UK approaches 29th March.
But despite the potentially gloomy outlook, the Seven research isn't alone in arguing that conditions might not look so bad to potential investors.
Knight Frank recently published research which found that the UK has reclaimed its position as Europe's leading commercial property investment market in 2018. Over the course of the year the UK overtook Germany to become the favourite destination for property investors, the research suggested.
Its survey of 155 leading property investors representing organisations with an excess of £500bn of real estate assets under management found that 21% of investors identified the UK as their preferred investment market in 2018, up from 12% in 2017. While over half do anticipate a reduction in investors demand over the next three to five years, a third of investors see demand for UK assets increasing.
Chris Bell, managing director of Europe at Knight Frank, said: "There is a huge weight of capital to be allocated to European real estate, including an unprecedented level of private equity dry power, and a growing pool of private wealth. The questions is where it will be deployed. The emergence of the UK as the European market of choice in 2019 is interesting, suggesting many think that pricing looks attractive."