13 Jan Why international investors are buying into the UK property market
International investors have always considered the UK property market to be one of their favourite asset types, with the industry offering safe and secure returns. However, interest in this market has increased exponentially of late.
According to a recent report released by Select Property , the real estate market has been a key area of interest for international investors, with this group of financiers helping to prop up the industry over the last few years following the bursting of the property bubble during the global financial crisis.
In its report entitled An International Investors Guide to UK Property Laws, the property investment firm looked at statistics that demonstrate the growing popularity of UK real estate. Deloitte revealed that £20 billion was spent on the industry by foreign buyers in 2012, while as much as 82% of property transactions in the City of London during the first half of 2013 was made by international investors, according to BNP Paribas Real Estate.
Trade and Investment Minister Lord Green said: “The UK has received a major vote of confidence from foreign investors confirming that the UK remains a world leading business destination.”
Asian investors are particularly keen on investing in the UK and spent £1.04 billion in the country during Q1 2013, according to The Financial Times.
The reason behind this huge interest is the result of instability in their own country’s economy, as investors are becoming increasingly concerned about keeping money in their home nations.
BNP Paribas Real Estate also reported that UK property investors accounted for less than one-fifth of all commercial property transactions during the first half of the year, showing just how much the market relies on international investment to stay afloat.
It also stated that spending by investors from Asia surged by 166% during the quarter to June 2013 in comparison with the previous three-month period. This is because the UK is regarded as a safe haven when compared with other economies, particularly London, which has a long history of strong property investment opportunities.
While other countries might suffer from weak political and economic climates, the UK has fared relatively well throughout the economic crisis, and investors feel more confident in putting their finances in a stable market in this secure nation than many other types of assets.
Richard Garside, Director for BNP Paribas in London, said: “All parties are attracted to London by the high quality of investment stock and the mature and transparent nature of our market.”
Further to this, the UK is also attractive to foreign investors due to its own strong economic climate, its favourable property taxes, increasing property values and growing buy-to-let market as a result of its growing rental market.
Whatever the reason for foreign investors to plough money into the UK’s property sector, this trend does not appear to be fading any time soon, with investment set to remain strong into 2014 and beyond.
Furthermore, while Britain’s real estate is regarded as a secure market for property investors from around the world, international investments also offer security for the UK, with this group contributing much-needed finance into the sector.
Indeed, Lord Green stated: “Attracting foreign investment is an important element of the UK government’s economic and growth programme and UKTI will continue to work with companies to help create and sustain a globally attractive, highly competitive and truly international economy.”