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Sharp rise in international investors buying regional UK property

Sharp rise in international investors buying regional UK property

Taking advantage of the current currency window of opportunity, 45% of all commercial investment in regional cities in 2016 came from overseas buyers.

 

Summary:

  • More international property investors are focusing on key regional UK cities
  • 45% of all regional commercial investment in 2016 was made by overseas investors, totalling £1.1bn
  • A weak pound has created an opportunity to acquire British real estate with greater affordability, while strong regional yields are starting to reduce the international focus on London

The global investor community is making the most of the current sterling volatility – and more are looking towards real estate in UK regional cities.

A new report from Knight Frank has found that a notable spike in interest in cities outside of London from international investors drove the strength of the UK’s regional commercial property sector in 2016.

It found that £1.1 billion was invested in the sector by overseas buyers in 2016, accounting for 45% of all investment collectively. This represents year-on-year growth of 10% for the sector, which covers offices and commercial buildings in Knight Frank’s 10 key regional cities.

“Regional UK offices remain an attractive property investment offer for overseas investors attracted by the weak pound, the sophisticated property market and relative political stability,” said Alastair Graham-Campbell, Head of Regions at Knight Frank.

“Not only are yields in excess of those in London and the South East but investors are benefitting from a substantial return on their equity from seeking prudent bank lending at competitive rates.”

Edinburgh, Bristol and Sheffield all recorded higher levels of office investment in 2016, while it was reported in January that there has been a 50% rise in inquiries for residential real estate from Chinese investors in Manchester.

Despite a fall in investment volumes from domestic buyers last year, international buyer numbers have risen, as last year’s European Union referendum caused the pound to fall to a 31-year low, allowing those dealing in dollars and greenback-pegged currencies to enter the market with greater affordability.

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