Latest Global Real Estate Outlook shows UK cities represent value post-Brexit vote
- GBP weakness makes it cheaper for GCC real estate investors to buy UK property
- “Brexit discount” makes London and Manchester even more attractive investment destinations
DUBAI, 20 September, 2016 – A strong US dollar, the result of political and economic uncertainty, has created a sweet spot for Middle East investors looking to buy property in the UK, according to IP Global.
The International property investment firm’s latest Global Real Estate Outlook report highlights London and Manchester as cities that show great potential for investors due in large part to the “Brexit” vote.
After the UK’s decision to leave the EU on June 23rd, both the British pound and Euro have lost value against the US dollar, creating a so called “Brexit discount”. This currency situation makes it cheaper for dollar-pegged Middle East investors to buy assets in the UK and Europe.
According to the GREO, London and Manchester are key investment hotspots where investors can take advantage of the “Brexit discount”.
Data from IP Global shows that US dollar-pegged Middle East investors who purchased a GBP350,000 property in the UK on September 11 would have saved over USD50,000 had they made the same purchase just before the Brexit vote result was announced.
London’s severe housing shortage continues to put upward pressure on prices, so much so that properties in Prime Central London are now almost 60% more costly than they were prior to the 2008 financial crisis. Valuations in the same period have increased by 14.5% each year.
Manchester, currently the strongest UK market outside of London, has several large infrastructure and regeneration projects underway, helping fuel its economy and bolstering the city’s housing market. Manchester offers rental yields of up to 6.02%, the highest in the UK.
A weaker Euro currency has also added to the appeal of Berlin as a property investment destination. The city, one of IP Global’s top investment hotpots, saw apartment prices rise 10.1% in 2015. Berlin has established itself as the start-up capital of Germany, with one new start-up set up every 20 hours. This helps explain why the German capital expects 400,000 new residents by 2030.
Richard Bradstock, Director and Head of IP Global, Middle East, commented:
“Now is the right time to take advantage of the Brexit currency opportunity to tap into the medium and long term potential of the UK market as well as European cities such as Berlin. Asian investors have been quick to jump on this opportunity already. Last month, Juwai, China’s biggest international property portal, reported that buyer enquiries into UK property were up by 40%.
While the ‘safe haven’ element is likely to remain a permanent fixture, the FX market will bounce back in time. That’s why we see this “Brexit discount” as a relatively short window of opportunity to buyers looking to invest in the UK and Europe.”