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UK most attractive country in Europe when it comes to property investment

September 5, 2016Article by Ray Withers

New figures from the Department for International Trade have shown that the UK is leading Europe when it comes to foreign direct investment (FDI), with 2,213 inward investment projects secured in the 2015/16 financial year. The number is an 11% increase over the 2014/15 figure, showing the strength of the UK’s position prior to the Brexit vote.

The value of foreign direct investment

Strong levels of FDI can make a big difference to a country. In Britain, the record-breaking inward investment in 2015/16 meant that around 116,000 jobs were either created or safeguarded, according to the Department for International Trade’s reckoning. In terms of the new roles created, the year saw an average of nearly 1,600 jobs added every week.

The Department for International Trade’s data also shows that almost 390,000 jobs have been created in the UK since 2010 as a result of FDI.

Who’s investing in the UK?

The USA was the UK’s largest foreign investor in 2014/15 and maintained that position for 2015/16, investing in a total of 570 projects. China (including Hong Kong) was the country’s next largest investor, investing in 156 projects. India was in third place, with 140 projects funded.

In total, the UK received FDI from 79 countries in 2015/16. It was particularly popular with emerging markets, receiving more investment than any other European destination. The number of UK projects invested in by Latin America rose by 240% compared with the previous year, while Central and Eastern European investment into UK projects rose by 131%, based on the Department for International Trade’s figures.

Foreign investment in the UK property sector

As a property professional who’s been operating in the UK for over a decade, I’ve definitely seen first-hand the value that FDI contributes. 51.9% of Property Frontiers’ current investors in UK projects are from overseas and their contribution to the UK’s private rented sector is an important one. We’ve found that our projects resonate most strongly with buyers from the Far East (our Parker Street Residences development in Liverpool in particular has struck a chord with buyers from Hong Kong and Thailand) and the United Arab Emirates (most notably Dubai and Qatar).

FDI is supporting developers to build much-needed rental accommodation in cities up and down the country. The level of interest in UK property from overseas is also serving to drive up quality across the sector, as each new development strives to innovate and provide a higher standard of accommodation for the country’s rapidly swelling number of tenants.

Take The Divine Collection in Birmingham. The Midlands as a whole enjoyed a 9% rise in the number of jobs created through FDI in 2015/16 and in Birmingham overseas investment in residential property has performed well. The Divine Collection is one of a new era of developments that blend city centre living with contemporary décor and access to outstanding features such as the 483 sqm roof terrace with direct city views. Investment is available from £165,000 for a one-bedroom apartment, with every home in this collection hand-picked due to its offering the very best of modern city centre living.

FDI post-Brexit

Nobody can predict what the future will hold in terms of inward investment to the UK as the process of the country uncoupling from the EU goes forward. However, indications so far are that inflows are being sustained at similar levels to those before the vote. The fall in the value of sterling has made the UK very attractive to those investing from overseas, particularly those with euros and dollars to spend. The pound’s drop has given the UK breathing space to reassess its position and stress how attractive it will remain, even outside of the EU.

While much is uncertain about what the coming years will entail, we do know that the UK’s property market fundamentals will not change. We are in the midst of a chronic housing shortage, with demand outstripping supply at an ever-increasing pace. While those factors remain unaddressed, the country’s residential property sector will continue to offer attractive investment opportunities to domestic and foreign investors alike.

For more information about investing in Birmingham’s Divine Collection, contact Property Frontiers or call +44 1865 202 700.

Author

Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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