Foreign Investors Flood the UK Market
2016 will go down as the year of major economic upheaval and change.
The UK’s exit from the EU, China’s economic woes, higher interest rates in the U.S., historically low oil prices and increasing tensions in the Middle East have created a cocktail of uncertainty.
But despite the global issues, 2016 could well go down as the year of property investment as shrewd investors look beyond the smoke that has risen in the aftermath of so many economic fires.
And nowhere in the world is that being seen more than in the UK where billions of pounds are being pumped into the economy by canny foreign investors looking to take advantage of the weak pound and the opportunities that have suddenly flooded the market.
And investor sentiment towards property is projected to remain positive, according to Colliers Global Investor Outlook 2016,
Of the more than 600 investors surveyed, 52% said they will increase allocations towards property this year. Only 11% will decrease and the message from foreign investors is that property is the one asset where they are almost unanimously bullish.
London, Paris, New York, San Francisco, Tokyo and Sydney are the main targets for direct cross-border property acquisitions over the next 12 months.
Global transactions are expected to exceed 2014 levels and will approach pre-financial crisis levels in 2016, according to Colliers estimate and more than half of the respondents with multi-asset real estate portfolios said they will add to their holdings in the next 12 months.
In Europe, the UK is far and away the hot spot with 63% adding to their property portfolios there this year.
Offices, Hotels, shopping centers and luxury retail are among the top investments in continental Europe, while U.K.-bound investors are after tourism opportunities and residential properties.
Britain’s exit from the EU saw a sharp fall in sterling making assets cheaper for overseas funds and private buyers and triggered a Brexit bounce in the commercial and residential property sector, according to the international real estate group.
“This has been the big irony of the leave campaign – which is anti any foreign influence. Since Brexit we have seen a price correction in property and a fall in sterling which opportunistic international investors have seen as a chance to pile in,” says Guy Grainger, head of Europe, the Middle East and Asia for JLL.
Investment volumes in the UK commercial property market slowed in the build up to the referendum. Transactions were 31pc lower in the first quarter of the year compared with Q1 2015, and 11pc lower in London as activity stalled amidst uncertainty, the advisory group found.
Experts in the luxury UK residential sector have also seen a Brexit bounce. Agents have been swamped with calls from Chinese, Middle Eastern, Italian and Spanish buyers looking for a bargain after the pound tumbled to more than 30-year lows, making the exchange rate very favourable for foreign buyers.
Northern Powerhouse Developments specialises in providing a longer term fixed income within the Hotel and leisure sales and leaseback industry, sales for the developer have reach an annual high and demand is strong and shows no signs of letting up. A spokesperson for the company commented;
"For many overseas investors commercial property is offering greater returns with a stronger tenant covenant for longer terms. This has seen a swing in our enquiry levels for leisure based property away from the more traditional buy to let"