As city-dwellers seek to move out of the capital towards a better life in the country, it seems that foreign investors are following suit. After three decades of investing in London, foreign property investment in being attracted to Britain’s regions.
Investment in the private rental sector in cities such as Birmingham, Leeds and Manchester, which offer investors more opportunity and better value for money, reached £1 billion in 2020.
Since the beginning of the pandemic, average property price rises in London have been much lower than elsewhere in the UK but house prices in the capital remain double the average of property prices in other regions.
Much of the property investment is coming from the likes of the United States, Hong Kong and Saudi Arabia. Most money is being directed at regional homes to rent or suburban build-to-rent, and in particular towards apartments for young professionals. Once built, the developer either keeps the property or sells the asset to overseas individuals, usually based in Asia. Further returns for investors are made through management fees.
One investor, Beech Holdings, is a Manchester developer that started out offering student accommodation. The company refurbishes older commercial buildings and contaminated sites, and is building over a thousand homes in Manchester and Newcastle, as well as looking at the potential of other cities including Sheffield, Leeds and Birmingham. Other areas of the UK are also on the radar of foreign investors, including Bristol and Edinburgh.
Some companies are changing their focus from apartment buildings to family homes, reflecting the changing attitudes of people since the start of the pandemic, who increasingly now look for a larger home with private outdoor space. This type of property in London is increasingly less attractive and unaffordable for many people.