- September 22, 2023
- Posted by: pr_finance
- Category: Investment
Choosing to broaden your horizons and include international properties in your investment portfolio might seem overwhelming at first. This can feel intimidating, even for seasoned investors who’ve invested in numerous properties before. However, as more and more investment-savvy individuals recognize the benefits of a diversified portfolio, international real estate investments have gained significant traction.
Investing across different cities and countries helps spread and, in turn, lowers your portfolio risk. Factors such as the location, quality of the unit, and the influence of larger-scale economic conditions always play into this decision. Recently, the real estate market in the United Kingdom has shown strong capital growth, making it the market to watch in 2022 and beyond. But, why invest in a UK property?
A Haven Amidst Uncertainty
Despite the economic turbulence brought on by the global pandemic, the UK’s property market has remained robust and largely unaffected, a characteristic likened to certain safe-haven investments. Property forecasts suggest that by 2025, the UK could witness a whopping 21.5% growth in property prices. Data from the last few years also shows a steady rise in Foreign Direct Investment (FDI) in the UK, reaffirming its position as one of Europe’s stalwart economies.
Fast-Growing Rental Market
UK’s rental market is driven in part by the expanding population, anticipated to reach 74 million in the next couple of decades. This population expansion translates to an increasing demand for residential properties. With property prices soaring, many young professionals are leaning towards indefinite renting while an emergent trend among older generations also sees a shift towards private rental housing.
Therefore, it’s not surprising that rental prices have shown a 3% increase over the past year and predictions indicate rental prices can grow up to 12.5% between now and 2023. This upward trend further highlights the taut strength and potential promise of UK property investment, providing investor optimism during uncertain economic times.
Undersupply of Property
One must also consider the currently high demand and correspondingly low supply of properties within the UK property market. A few contributing factors like supply chain disruptions, rising inflation, and labour shortages make it difficult for the market supply to catch up with the growing demand—an advantageous situation for those seeking investment opportunities that will appreciate over time.
Long-Term Property Price Appreciation
High demand combined with low supply leads to property price appreciation. Consequently, key regional cities in the UK are expected to experience 13% price growth by 2026. Despite minor fluctuations due to the stamp duty holiday, property prices on average are on the rise.
Shifting Investment Focus to Birmingham
London has traditionally been a favourite for real estate investments due to its high rents. However, in light of escalating property prices and taxes, investors are now attracted to regions beyond the capital for promising returns. Birmingham, also known as the ‘Second City’, has emerged as an attractive center for property investments. The city’s real estate market offers a higher average net yield, and with steady growth in property prices, Birmingham is fast becoming a go-to for savvy investors.
Expanding your real estate investment portfolio beyond domestic markets is a strategic approach to risk management and diversification. Considering the high demand for housing in the UK, coupled with increasing rent prices and capital growth, the UK property market is showing great resilience and reliability, making UK property investment a smart financial move.
Investing in a UK property could very well be the next perfect pairing – offering a fast-growing rental market, low supply, consistent price appreciation, and no property tax.
So, are you ready to venture into the vast and rewarding realm of international real estate investment? Contact Max Property Finance for a free consultation today.