Before and after the European Union referendum last year, British voters were warned that a vote to leave the Union could spell disaster for a number of different sectors, chief among which was the property market. It was expected that demand would fall, house prices would tumble, and investors from other nations would desert the UK in their droves as they sought out more stable returns.
However, almost a year and a half after the UK voted for Brexit, and as the negotiations for the process rage on, a new study has found that across a range of sectors, the UK remains one of the most prominent and popular places for investors to spend their money.
Primarily focusing on mergers and acquisitions (M&A), a report from Ernst & Young looked at the sentiments of 3,000 investors across the world, and found that the UK is now the third most popular place to do business for foreign buyers. It sits behind only China and the US on a global scale, which also means that the country is now the most prominent investment hotspot in the whole of Europe, despite fears about what the disconnect from the Union would mean.
It comes a year after the UK slipped down the rankings in the aftermath of the vote to leave the EU. Since then, the country has managed to climb two places up the leaderboard, now sitting on the podium with two of the world’s largest superpowers.
Decline in the value of the pound boosted demand
One of the main reasons that more companies are looking to complete M&A deals in the UK is also a big factor in increasing spend among property investors. The fall in the pound over the last year has meant that investors in M&A are able to get more for their money. And it’s the same for property buyers. When their own currency performs well against the pound, buyers are able to get more stock in the UK than they might have in the past, which means better returns for the same spend.
Another reason for the rise in sentiment towards the UK as a place to do deals is that it has long established itself as a strong and growing business market. And again, property mirrors this trend for investors. Buyers of rental stock in the UK can rest assured that they are putting their money into a market that has long proven itself to be massively profitable and strong in the face of adversity, which means it falls in line with the way investors view businesses nationwide.
Of course, the other good news for the UK property market is that an influx of M&A deals that swell business spend in the UK is likely to have a positive effect on the country’s property market. When businesses expand, more jobs are made, and this can mean more of a need for more homes to be built for the rental market in order to meet a growing level of demand. Investors who are able to foresee this need will always be best placed to take advantage of growing demand, and by extension, the returns that come with it.