Four out of five property investors based in Hong Kong, Dubai, South Africa and the UK are still investing in British real estate, research claims, with a quarter of UK-based investors suggesting Brexit is their reason for doing so.
A poll of 450 high net worth investors based in these four countries indicated that 85 per cent of those invested in either residential or commercial property were still keen on the asset class and looking for new investment opportunities in Britain.
The cost of buying British property has been pulled down since the Brexit vote by the fall in the pound, however, a tax crackdown has made it more expensive.
Seven Capital director Andy Foote
Seven Capital’s Andy Foote said: ‘The fact that one quarter of property investors say that Brexit was the catalyst for their investment is really interesting.
‘What it shows is that there’s a firm confidence among a good number of UK investors, likely the most seasoned in the property world.
‘It follows Warren Buffet’s now-famous quote suggesting investors should be “fearful when others are greedy and greedy when others are fearful”.
‘If this is a rule to play by, then now certainly would seem like a good time to invest.’
And in September last year, Bank of England governor Mark Carney told mortgage lenders to stress borrowers’ affordability based on house prices plummeting 30 per cent if no deal is reached on Brexit.
While Carney’s consideration was for the stability of the banking system in an absolute worst-case scenario, clearly a fall in property values is a genuine concern for the market as the UK approaches 29 March.
But despite the potentially gloomy outlook, the Seven research isn’t alone in arguing that conditions might not look so bad to potential investors.
Knight Frank recently published research which found that the UK had reclaimed its position as Europe’s leading commercial property investment market in 2018.
Over the course of the year the UK overtook Germany to become the favourite destination for property investors, the research suggested.
Its survey of 155 leading property investors representing organisations with an excess of £500billion of real estate assets under management found that 21 per cent of investors identified the UK as their preferred investment market in 2018, up from 12 per cent in 2017.
While over half do anticipate a reduction in investor demand over the next three to five years, a third of investors see demand for UK assets increasing.
Chris Bell, managing director, Europe, at Knight Frank, said: ‘There is a huge weight of capital to be allocated to European real estate, including an unprecedented level of private equity dry powder, and a growing pool of private wealth. The question is where it will be deployed.
‘The emergence of the UK as the European market of choice in 2019 is interesting, suggesting many think that pricing looks attractive.’