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Insight & Opinion

Why now is the right time to buy in the UK for foreign investors

Author: Gemma





The UK’s economic performance is making it a good time to invest in the UK for foreign buyers.

Across the world, a number of different economies are starting to recover at long last following the global financial crisis that struck down many markets, and this has led to a change in sentiment, with more people looking to invest their money.

It’s the reason, for example, that a greater proportion of Australian homes have been snapped up by Chinese investors in the past two years, as they seek out areas of the world with the best chances of strong returns.

And with the UK economy starting to pick up again, is now the right time for investors to put their money in the property market in this country?

The UK economy is now starting to see impressive levels of recovery, with the tides having turned at last in June last year. Economists now predict that the economy will expand by some 2.7 per cent in 2014 as a whole.

According to the latest report from Currency Solutions, this has left the pound now in its strongest position for years, and predicts that as unemployment levels fall and interest rates rise throughout 2014 and 2015, the UK will be in a much stronger position to protect the investment of foreign buyers.

Exchange rates

Perhaps the biggest reason to invest in the UK property market at the moment is simply how well it is recovering. In a straight look at house prices, Nationwide’s latest report puts prices at 11.1 per cent higher in May 2014 than they were a year ago, showing the potential for capital gains across the market.

For those coming from overseas, though, the best indicator we can look at is the rate of recovery of the pound compared to other currencies in the past year, which indicates that the UK is the place to own in order to see an investment grow in value.

Currency Solutions shows that in the space of the past year (April to April) the pound increased by almost ten per cent against the dollar. What this means for someone coming from America to buy in the UK is that a £250,000 home would now be worth £25,000 more than it would be back home.

The same is true when we hold the pound up against a number of other big currencies across the continent.

For example, the euro has expanded 3.66 per cent slower than the pound in the last 12 months, while Australian-based buyers would have seen their investment grow by £49,950 more than in their own nation (19.98 per cent) if they owned assets in the UK.

It is a reality that looks set to continue for the rest of the year, too, according to the report. It said that the fact unemployment has now fallen below the seven per cent barrier leaves most economists certain that the Bank of England will increase interest rates in the first quarter of 2015.

This, Currency Solutions said, leaves the pound in a very commanding position compared to other major currencies, which should mean it performs well for the rest of 2014 in anticipation of the prices heading upward again – so now really is the time to invest in UK property.

With a general election coming up in mid-2015, and the political uncertainty this can bring, it would also make sense to get in ahead of any potential fall in the value of the pound next year.

The rise of the regions

Of course, the performance of currency is not the only reason to look towards investment at the moment. There are other reasons, such as the potential to hit voids in the market and meet demand head on.

This is something that is starting to take shape in the UK, and particularly in the commercial property market. More and more investors are moving away from the low-supply area that is London and into regional cities where demand is rising and stock is both cheaper and easier to acquire.

In the likes of Liverpool, more and more media companies are moving north to take advantage of lower rents and high quality spaces, leaving investors with a definite demographic to target.

In 2013, £1 billion worth of money from foreign investors was spent in the commercial property sector outside of London, showing just how popular the investment tactic could become down the line.

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