Britain’s vote to leave the EU is proving that one man’s gloomy predictions about the future are another man’s lucrative opportunity. This is especially true for foreign investors looking to snap up buy-to-let properties in key areas in London and other developing cities in the UK.
Estate agents in the UK are reporting an increased interest from Chinese, Middle Eastern, Italian and Spanish buyers looking for a bargain after the pound tumbled to more than 30-year lows. The sharp fall in Sterling is making the exchange rate very favorable in creating investment opportunities for foreign buyers.
These transactions have helped keep the British property market stable in the months before Brexit. Real estate portals like eMoov.co.uk are reporting as much 50 per cent increase in the number of buyers from China and Singapore.
The main reason for entry into the post-EU property investment in Britain is foreign investors’ attempt to take advantage of the current indecision in the market due to a weaker Pound. Buyers from the Euro Zone gained a €50,900 (£42,000) discount on the average London house price in the wake of the referendum result, according to Stirling Ackroyd, a London estate agent.
The depreciation in the Pound Sterling means the average price of a house in London now equates to just €579,200 – compared to a record high of €630,100 in November 2015. This opened a door of opportunities for overseas buyers who can now snatch real bargains across London. In fact, London has become a more affordable global property hotspot after the dip in the Pound’s value and it is particularly attractive for investors paying in Euros.
Foreign buyers are having a positive impact on the central London property market. The influx of people wanting to put their money in a stable asset in a Sterling currency is making up for domestic buyers reconsidering their decision following the recent tax changes. 55 per cent of the property market in areas such as Mayfair and the West End is based on non-EU buyers from the Middle East, India, Russia and Africa.
Property in the UK remains a reliable investment for domestic and overseas buyers alike. Some domestic buyers also choose to buy now not for short term gain, but because they have chosen particular locations for their long term development opportunities. Both owner occupiers and professional investors, view property as the best performing investment asset class around. And the huge shortage of London property against strong domestic driven demand is still stable in the months leading to Brexit.
Foreign buyers snapped up 3,600 of London’s 28,000 newly built homes between 2014 and 2016 alone, with more than 70% of the homes bought by foreigners used as rental investments. London homes are becoming more and more attractive as a stable investment and a safe-haven for foreign buyers’ money, particularly when they live in politically unstable countries. Buyers from Hong Kong and Singapore accounted for almost half of all transactions by foreign buyers, followed by Malaysia and China, according to mayor Sadiq Khan’s research.
In addition to the rising number of foreign investments, recent conditions have made the market very resilient in terms of capital appreciation and resale figures. Therefore, investors can be confident they will earn a considerable profit on their asset when they sell it on. With the rental market being incredibly buoyant recently, there are excellent opportunities for international and domestic investors to earn a regular income and a good return on their buy-to-let investments.
