With speculation around inflation and interest rates, and talk of new tariff changes, it may seem like an uncertain global economic landscape for investment.. However, when it comes to smart capital, uncertainty often creates opportunity.
When there is limited stability across markets, prices often drop, creating unique chances to purchase investments at a lower cost.
Read on to discover why now is in fact an excellent time to invest in UK property, particularly outside of London.
Rental Demand
Demand for accommodation in top UK cities such as Birmingham and Manchester is increasing rapidly, with the supply unable to meet this demand.
Rental demand in the capital of the North, Manchester, is experiencing a major surge, resulting in rental growth in the city increasing by almost 46% in the past five years. The city is consistently increasing in popularity, and retains over 50% of its graduates. This results in an abundance of young professionals eager to begin their careers in this world-renowned city, and a high demand for city centre living.
Another city with a high graduate pool is Birmingham. Also experiencing a huge increase in rental demand, Birmingham has been revealed as having the largest supply and demand imbalance in the UK. According to property consultancy Marrons, Birmingham needs to build 127,000 homes over the next two decades alone.
With both of these cities experiencing vast increase in rental demand, the time to invest is now, whilst property prices remain at an attractive entry point.
Attractive Entry Points
Luxury apartments in both Birmingham and Manchester can be secured with significantly less capital than in London due to more attractive entry points, and also offer higher rental yields.
Historically property value in London has increased drastically, however now other cities such as Manchester and Birmingham are leading growth forecasts. Manchester is predicted by Savills to see a sales price increase of 30% over the next five years, with Birmingham leading JLL’s forecasts in both sales and rental growth, with rental growth expected to increase by 9.5%.
Many developments within Manchester and Birmingham are off-plan, meaning only a small amount of capital (10-25%) needs to be committed, with the rest of the payment due on completion, often a few years away. Investors who choose off-plan developments can also benefit from accelerated capital growth on their property.
Will overseas investors see a currency advantage?
In property investment, currency exchange rates play a significant role, and can offer an investor attractive benefits if purchasing at a strategic, well timed moment.
Currently the British Pound (GBP) is stronger than it has been in recent years, and is predicted to grow further.
However, despite a recent uplift, the Pound is still lower than historical averages, creating a unique window of opportunity for overseas investors that may hold capital in other currencies. By taking advantage of the Pound standing at a lower rate than previous figures, an overseas investor may be able to buy property at a ‘discount’, as a direct result of a favourable exchange rate compared to when the Pound returns to its higher average rate.
As property is often regarded as a longer term investment, investors will likely hold this asset for several years, in which time they may potentially gain higher returns, as the Pound is predicted to strengthen further. This currency advantage strategy of purchasing before a predicted growth period can offer large benefits for investors seeking UK property opportunities.
Cities Transforming
The UK government is investing significant funding into regeneration of major cities, including Manchester and Birmingham.
HS2 – the high speed train coming to Birmingham is set to broaden commuters opportunities, offering a quicker and more accessible route into London than the neighbouring boroughs. With hybrid working and HS2 making Birmingham an accessible city for London based professionals, there is a significant increase in demand for luxury property, with Edition Birmingham catering to this demand.
In Manchester, major regeneration projects such as the redevelopment of Manchester United’s famous stadium, Old Trafford, are creating thousands of new jobs in the city and future-proofing infrastructure. Long term growth is evident in the transformation of Manchester’s skyline, with luxury residence One Port Street revolutionising city centre living.
Why Invest Now?
Despite global uncertainty, the UK is deemed one of the most stable high-performing asset classes. With advantages such as the currency differences currently benefiting global investors, it is an excellent opportunity to take advantage of the current situation and invest in property whilst the exchange rates are favourable.
By investing in cities such as Manchester and Birmingham, top UK cities experiencing major growth and regeneration, investors can secure property at an attractive entry point, before pricing catches up with the demand.
Select Property is a UK property developer with over two decades experience. With global offices in Manchester, Dubai, Shanghai and Hong Kong, our team can assist you with securing the right property best suited to your individual investment goals. Contact us to learn more about the current UK property market, and why now is a great time to invest in UK property.
**Disclaimer: This information is correct at the time of writing, is for general knowledge and guidance only and does not constitute financial advice.**