The total amount of cash invested in the global property market peaked at £1.17 trillion in 2017, with Asian investors boasting the biggest appetite for property. Responsible for more than half of the global capital spent, investors from Asian countries such as China also put nearly £14 billion into Europe’s property market, with a strong focus on UK property. Over £2 billion was devoted to the UK market in the first quarter of last year alone.
Currency Strength and Cheaper UK Prices
A big pull for Asian investors is the weakening of the pound in comparison to Asian currencies. For example, since the Brexit referendum, the pound weakened by 12% against the Chinese yuan. Cheaper than currency in their home countries, investors are able to purchase more for their money in the UK market, saving significant amounts of cash.
Property prices also come into play, with costs of purchasing painfully high in China especially, providing low rental yields in comparison to what can be achieved in the UK. Although London is infamous for its extravagant property prices, it still provides cheaper buildings per square foot than Hong Kong and Tokyo.
Brexit Fails to Discourage Investors
Speaking of Brexit, trends suggest that the economic uncertainty of Britain’s future due to the political upheaval is not deterring Asian investors. The renowned security of the UK’s property market is strong enough to persuade investors to remain optimistic about purchasing property on British soil. It offers an opportunity to diversify assets overseas with a safety net. In fact, the percentage of UK investment coming from Asian money, specifically from Hong Kong, is rising year on year.
Overseas Student Numbers on the Up
Another reason for the increase in Asian money in this growing global market is the fact that China sends the most international students to UK in comparison to all other nations. Keen to ensure their children stay in the finest accommodation when studying abroad, their parents invest in luxury student properties close to the university campus.
Some investors decide to put money into another more residential property which doubles up as a place to stay when visiting and a potential future home for their children if they choose to remain in the UK after graduation. This is reflected in statistics that indicate Chinese buyers account for about 20% of residential property transactions in London alone.
The Future of Asian Investment
All of these factors predict that Asian investors will continue to make a beeline for the UK market. A current emphasis on Chinese spending could be rivalled by Japanese input in future years. As the strength of the Japanese yen currency continues to rise, the population is expected to decline. Less tenants to fuel demand could convince investors to look to more affordable UK cities where inhabitant numbers are soaring and show no sign of slowing down.
Additionally, northern cities such as Liverpool and Manchester are creeping into Asian investor radars. Property prices are cheaper up north with the capacity for great rental yields. This, plus the increasing prominence of the Northern Powerhouse is pushing cities like these further out into the world. With most heading to the capital for their first purchase in the UK, expect to see other major British regions claim a bigger portion of the Asian market in upcoming years.
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