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Insight & Opinion

Now is the time for SE Asian investors to benefit from Brexit

Author: Gemma





10 reasons why South East Asian investors are investing in UK property

As the date of the UK’s departure from the EU is extended to 31 October 2019, some international buyers are unsure when to act to maximise their returns from a UK property investment. After careful consideration, here is what the experts at Experience Invest think…

Favourable exchange rates won’t stay low forever

UK property is traditionally viewed as a reliable investment, particularly by international buyers who can make their money go even further at times, like now, when the exchange rate favours their home currency however, the pound is likely to climb to its previous highs post-Brexit.

The forecast already looks good, with the Bank of England’s latest update reflecting a more positive UK growth forecast, which has been raised from February’s projection of 1.2% to 1.5%.

The UK has shown signs of stabilisation and with the economy performing better than anticipated, it won’t be long before the pound regains its strength. For investors looking to capitalise on the buying opportunity that Brexit presents, it is better to act now to secure the best price and growth potential.

The table above shows the country percentage gains against GBP from the pre-Brexit vote high to the post-Brexit vote low.

The UK is a safe haven for property investment

Since the global economic downturn in 2008, the UK has been considered as a safe haven for real estate investment. While previously strong markets such as America and Australia, and fast-growth areas such as the Middle East saw prices drop – Dubai by as much as 65% in places – the UK remained relatively strong.

While prices decreased, Great Britain’s property market was one of the fastest to recover, with prices rising higher than pre-2008 peaks in as little as 3 years.

For many years, UK property has demonstrated its value for investors, particularly in the sense of long-term capital growth and reliable rental returns.

Low cost of borrowing

For almost 10 years, interest rates have been below 1%, making now a great time for investors to secure a great deal on a mortgage.

All mortgages are subject to terms and conditions, please seek independent advice.

Evergreen asset classes

Portfolio diversification allows investors to spread their returns across a range of alternative asset classes. In the UK, student accommodation and hotel markets have emerged as two of the most desirable choices.

The UK is home to 18 universities in the world’s top 100 and with domicile and overseas student numbers up by 2,500 to reach 561,420 for the 2019-2020 academic year, Great Britain remains a popular choice for university students. This continuous student demand is the fuel that drives strong occupancy levels and high rental yields. In terms of investment, over £4.5 billion was invested in the sector in 2018, up 10% on the previous year.

For investors looking towards the hotel sector, the UK’s market offers great potential for long-term rental returns. International visitor numbers reached a record-breaking 39.2 million in 2017, with many visitors making the most of the weaker pound. As the world’s 7th most visited country, the UK has a lot to offer. Popular tourist cities offer investors some of the best scope to achieve high rental returns and international buyers have been quick to secure investment while currency rates remain favourable. In 2018, investment from international buyers in the UK’s hotel sector reached £4.9 billion – more than double their investment in the previous year.

Hotspot locations

The impressive performance of regional property is fuelling growth in Northern Powerhouse cities. Investors looking towards these areas can expect growth much higher than the national average of 12.6% between 2018-2022 (JLL). The value of housing in Liverpool, for example, is expected to rise by 19.3% over the same period.

One of the most notable trends on the market has been the rise of London commuter belt property hotspots. Luton’s enviable transport links to Central London, affordable property market and £1.5 billion worth of private investment has reinforced its position as one of the most desirable buy-to-let markets in the UK.

Discounted properties

Off-plan opportunities are sometimes sold at discounted rates, which provides investors with a degree of protection in case Brexit has a negative impact on property values in the short- to medium-term.

For investors looking to maximise growth potential, a discounted off-plan apartment like Imperial Square, which is located in an area which is undergoing a period of strong growth, or is undergoing significant investment, offers a very good chance the investment will increase in value.

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