Keystone Property Group CEO says Brexit will not mean an ‘overnight apocalypse’:
The key feature of Brexit, its uncertainty, is leading to “fundamentals being overlooked and [the] perceived risk overstated at times”.
Which is why it is important to note that the main reasons why people buy and invest in the UK will not change due to the country’s vote to leave the European Union. Despite the headlines, there is not expected to be an overnight apocalypse when the UK exits the EU on March 29.
Even considering prevalent economic uncertainty due to the government’s lack of coherent Brexit policy, the private rental sector is expected to thrive. It’s likely that potential first-time buyers will hold off on purchasing, and instead choose to rent, increasing demand.
As it stands demand for housing already outstrips supply, and delivery of new homes is mostly owed to the success of the private rental sector over the past few years. Thus, UK property is fully expected to remain a sound long-term investment that has, historically, appreciated in value.
The UK is one of Europe’s strongest and most resilient property markets, and Office for National Statistics figures show that investment from overseas is continuing to rise at a steady pace. Interest in the UK private rental sector from US investors, specifically, has spiked. With a weak GBP, savvy overseas investors are taking advantage of the currency situation, twinned with a mid-long-term hold view of any UK property acquired (for income and growth).
Since the referendum in 2016, house prices have risen by 9.3 per cent. Ironically, Emoov research shows that average growth in Leave voting areas was slightly higher than the national average, at 9.46 per cent in contrast to 5.05 per cent in Remain areas, showing a more positive and clear ‘business as usual’ attitude in Leave regions.
For example, in the Sheffield City Region productivity has continued to rise year-on-year, at a faster rate than the East Midlands and the wider Yorkshire and Humber region. The proportion of high-skilled workforce in the area has risen, and manufacturing exports are a key driver of growth. Sheffield has also achieved incredible success attracting private sector investment from major companies, including Boeing, Rolls Royce, and McLaren.
We believe there is a unique opportunity to buy well located, good-quality assets that need attention – especially in major cities across the UK outside London, which typically offer more attractive, greater growth returns.
As a still maturing market, the private rental sector has huge growth potential and will continue to attract investors and provide steady returns, despite Brexit.