MIPIM UK opened its doors yesterday, with the result of the UK’s EU referendum still hanging in the air. Brexit, though, is already having an impact upon the country’s real estate, and overseas investors are racing to take advantage.
Attendance at the event, the largest property exhibition in the country, is expected to be at a record high this year, with heavyweight investors from around the world setting their sights on post-Brexit bargains. AustralianSuper, Fosun Property Holdings, GIC Real Estate, PGGM, Qatar Investment Authority and Teacher Retirement System of Texas are among those confirmed to be present between 19th October and 21st October. Investors from over 40 different countries are registered to attend, with a growing number of attendees from the USA and Middle East, as well as the Asia Pacific region.
Throughout MIPIM UK, a programme of conferences and talks will look at what Brexit means for UK investment and “where extraordinary returns may be found in these extraordinary times”. What once seemed extraordinary is rapidly becoming ordinary, though, as the UK government, led by new Prime Minister Theresa May, reinforces the country’s commitment to leaving the European Union, with Article 50 expected to begin the process in spring next year.
It is only fitting that MIPIM UK kicked off with a keynote speech from Sir Howard Davies, Chairman of the Royal Bank of Scotland, and Guy Hands, founder of private equity group TerraFirma, discussing the opportunities and challenges facing the UK property world in the wake of the Brexit vote.
For international investors, the focus is firmly on the opportunities Brexit has opened up. In the wake of the EU referendum, the pound dipped to below $1.23 against the US dollar today and also slipped against the euro by 0.2 per Cent to €1.1175. The weakness of the pound has made the whole of the UK property market more affordable to buyers from abroad.
While London remains an attractive safe haven for investors, though, the UK’s regional cities are fast becoming the number one targets for international buyers. Indeed, London’s house price growth has cooled in recent months, after years of racing ahead of the rest of the country. Now, regional cities such as Liverpool, Glasgow, Aberdeen, Edinburgh, Newcastle and Bristol are leading capital growth.
According to the Hometrack UK Cities House Price Index, Manchester saw prices rise 8.5 per cent year-on-year in Q2 2016, while Birmingham saw price growth climb 9.6 per cent. At MIPIM this week, delegates from all the major regions in the UK are out in full force to show what they can offer.
“Anywhere in the Midlands is a great investment,” comments Simon Mobley of property investment specialists Prosperity Fund.
Indeed, over 6,000 Londoners moved to the area during 2015. With that growing population and a low starting point for prices, the opportunity for both capital growth and rental yield is bringing in investors from around the world.
Prosperity Fund has recently launched Castle Court, a buy-to-let opportunity in Birmingham, offering over 7 per cent annual income for seven years from a fantastic range of modern apartments.
“We have had a huge influx of Chinese investors taking positions in our Midlands developments,” explains Mobley, who confirms that they have seen a rise in overseas investors since Brexit, encouraged by the highly favourable exchange rates. At the time of writing, there are now only 40 units available in Castle Court.
Sand Royale, which has just announced the launch of The Residence at Colonial Chambers, a stunning residential development in Liverpool’s commercial district, is also enjoying strong interest from overseas.
“We are seeing a spike in overseas enquiries since Brexit and the sharp drop in the pound, especially for cities like Manchester and Liverpool,” says the firm.
The project consists of 94 individual studio apartments in varying configurations and dimensions. Prices start at £69,950, with 7 per cent NET assured return for two years. The future for the UK in Europe is hard to predict, but as MIPIM enters its final day and the UK enters its negotiations with the EU, the Brexit boost for regional markets seems set to continue for some time.
“With private rents in Liverpool up 11 per cent in 2015 and with expected increases of a further 22 per cent before 2020, the Northern Powerhouses seem to be a first choice when it comes to overseas property investors,” adds Sand Royale.