- The fundamentals of the UK property market remain strong
- Currency rates have been favourable to international investors recently
- There is a dynamic market outside of London
It can be tricky to decide where to allocate your money if you’re an international investor looking to gain exposure to overseas markets. Not being familiar with other markets, or out of touch with your home market as an expat, can be off putting.
In this article we will cover five considerations for international investors in UK property to help you on your way.
1. Is it the right time to invest into British property?
UK property has a long and reliable history as an investment for consistent returns, across commercial and residential real estate markets. Naturally, one of the first questions that will crop up in an international investor’s mind will be “What will be the impact of Brexit?”. Considering the historic global economic and geopolitical events UK property has weathered previously, one can have faith that market fundamentals remain highly attractive.
There’s seldom been a bad time to invest into the British property market, and the country’s market remains a global leader, with London standing out in particular. For instance, the latest Schroders Global Cities 30 Index ranks London as the top city in Europe and second best in the world for investment, with the methodology behind the index ranking areas such as projected economic growth, disposable income levels, population size and investment level.
Similarly, Knight Frank’s 2018 Global Cities Report, a comprehensive study of real estate in the leading 40 cities globally, places London in first, citing the economy’s resilience to Brexit, record low unemployment rates and sustained interest from financial and technology firms.
The fundamentals of the UK property market remain strong, with house prices showing sustained, stable growth over long time periods. Land Registry data, which is collated by the British Government, details 26.4% growth over five years, 45.6% over 10 years and 314.2% over 25 years.
There are a huge number of commentators in the UK property market providing investors with a wealth of information and analysis. You can read more about our view on the current performance of the UK residential market here.
And despite what is going on economically and politically, regulation in the UK property market and financial services is also appealing for many, providing investors with a stable and respectable environment. Property Partner is regulated by the Financial Conduct Authority (FCA). Regulation, such as that from the FCA, helps raise the standards in the industry, and we welcome their input. We take our responsibilities seriously and always strive to deliver a high quality and trusted service to our investors.
2. How have exchange rates changed over the last 10 years?
Exchange rates also play an important part in international investment decision making. The below chart shows an index of various currencies’ exchange rates to the British pound over the last 10 years (30 June 2009 – 3 June 3019). For the most part, the last three years have been kind to international investors looking to invest in the United Kingdom compared to historical averages. The chart shows it is not always a stable direction but compared to five years ago, investors in the United Arab Emirates get a huge 33% more for their money based on exchange rate alone, Euro investors 10% more, Hong Kong investors 32% and Singapore 22%.
3. Should I invest outside of London?
Most prospective investors in the UK will view London at the top of their wish list for areas to invest in, and with good reason. In addition to the above ranking as a leading global city, its thriving economic, cultural and educational scene suggests London will remain attractive to investors for the long term.
Over the last few years, however, other cities across the UK have begun to make serious claims of their own as prospective investment hotspots, and offer higher yields for income focused investors, while retaining the key fundamentals of the entire UK, such as economic and political stability.
Birmingham, located under 90 minutes from London by train, Britain’s second city and the 8th largest metropolitan area in Europe, has undergone significant regeneration in recent years, with a £500 million redevelopment of its New Street train station, its £150 million Grand Central retail destination, and major developments such as Paradise and Arena Central underway.
Savills suggests average residential values in Birmingham have grown by 31% over the last five years, predicting compound growth of 14.8% over the next five years, whilst Knight Frank reports that average asking rents rose by 16% between 2014 and 2018, with net yields at 4.25% in the Build to Rent market. In addition, with four universities and over 70,000 students, the city is a thriving hub for higher education. A £1 billion expansion plan at the University of Birmingham creates further potential for investors looking into the Purpose Built Student Accommodation (PBSA) or Private Rental Sector (PRS) markets.
Manchester, located two hours from London via train and globally recognised for many years due to its sporting and musical contributions, has recently come of age as an economic and investment heartland. As well as being home to MediaCityUK, with tenants including national broadcasters BBC and ITV and employing several thousand staff, consistent high quality regeneration of the city centre since the mid 1990s has attracted multinational companies such as Adidas and Siemens to base their UK headquarters in the city, whilst Brother and Etihad Airways name Manchester as their European headquarters. Manchester will also welcome HS2 in 2026, whilst Manchester Airport is the third busiest in the UK after London’s Heathrow and Gatwick, and has scheduled flights to destinations across the world. JLL suggests rental growth of 3.1% per annum for the next five years, with house price growth of 3% per annum for the next five years, whilst reporting current strong Build to Rent net yields.
Other UK cities such as Liverpool, Leeds, Bristol, Edinburgh and Glasgow are also proving to be increasingly attractive to foreign investment, helped by significant funding into the cities’ commercial offering and infrastructure.
I’m convinced! What now?
At Property Partner we make it easy for investors to access UK property. Investors can build diversified portfolios by spreading their capital across multiple properties on our platform. If you are interested in building your wealth with us there are two ways you can get started:
- Create an account: it only takes a few minutes to complete your profile and add funds. Click here to see all properties available and pick your own, or alternatively have a look Investment Plans and automatically build a portfolio based on one of three strategies.
- Get in touch: we are more than happy to talk and discuss your needs and goals. If you’d like to speak to one of our Investor Managers click here for details.
With over 100 properties listed, a number that is ever increasing, and over 13,000 investors to date, Property Partner is a great option for an investor looking for direct access to a popular and rewarding investment asset class.
Capital at risk. The value of your investment can go down as well as up. The Financial Services Compensation Scheme (FSCS) protects the cash held in your Property Partner account, however, the investments that you make through Property Partner are not protected by the FSCS in the event that you do not receive back the amount that you have invested. Past performance is not a reliable indicator of future performance. Forecasts, if stated, are not a reliable indicator of future performance. Interest and capital returned may be lower than expected. Gross rent, dividends, and capital growth may be lower than estimated. 5 yearly exit protection, exit on platform, exit in line with a specific investment case or fund strategy, subject to price and demand. Property Partner does not provide tax or investment advice and any general information is provided to help you make your own informed decisions. Customers are advised to obtain appropriate tax or investment advice where necessary. Financial promotion by London House Exchange Limited (No. 8820870); authorised and regulated by the Financial Conduct Authority (No. 613499). See Key Risks for further information.