4 min read

Regional Property: The safe UK bet by Overseas Investors

Regional Property: The safe UK bet by Overseas Investors

After a year of significantly climbing housing prices outside London, British homeowners are not the only ones feeling rich. As a result, the "flats for sale in London" market is dwindling a bit. So, investors from Saudi Arabia to Hong Kong have increased their bets on the UK's regional cities, developing homes and reaping enormous profits.

For three decades, foreign wealth has streamed chiefly into the capital, drawn by a thriving economy and dramatically rising home prices.

However, when family-owned Saudi company AIMS Holdings reviewed the UK in 2019, it immediately found that cities such as Manchester, Newcastle, and Leeds provided superior value for money.

"When we originally decided to invest in the United Kingdom, we focused on London." Then we realized there were many more options available elsewhere. "It was a huge eye-opener," said Abdulaziz Albassam, CEO of AIMS Investments, the company's asset management department. The time was ideal.

Price Hike

In the year to April 2021, the average house price in England climbed by 8.9 per cent. However, the increase in London was just 3.3%, compared to 16.9% in the northeast of England. In Scotland, the average property price increased by 6.3% in the year to April.

London's house prices are twice the national average, and the epidemic has diminished its allure. Families are looking for larger houses with gardens outside of the city, and many workers no longer need to go to work every day.

Meanwhile, corporations are relocating work to regional cities to entice graduates by providing a higher quality of life. In April, Goldman Sachs announced the opening of a new technology centre in Birmingham, employing several hundred workers, as part of an increasing trend.

Most investment is towards private rental housing, primarily flats for young professionals. The developer either keeps the asset or sells it to people, most of whom are from Asia. They continue to manage the development for a charge, ensuring that its value is preserved.

Savills Insight

According to Savills, investment in the private rental sector in Manchester, Birmingham, and Leeds combined will exceed £1 billion in 2020, up from £361 million in 2018. "Investment demand is robust with several new entrants, both domestic and foreign," said Jacqui Daly, Savills residential research director. "Better returns mean the regional urban and suburban build-to-rent markets are attracting those adopting a long-term perspective."

AIMS purchased a controlling investment in Beech Holdings, a Manchester developer that created specialist student housing. Beech Holdings director Wasim Choudhury predicted 20-25 per cent capital growth between 2020 and 2025. "Covid has expedited our thesis," Choudhury explained. "Seven or eight cities in the United Kingdom have become suitable for institutional investors." The yield is more significant than that of the capital."

Beech Contribution

Beech is constructing around 1,000 flats and homes in Manchester and Newcastle, with a gross development value of almost £350 million, and is considering projects in Sheffield, Leeds, and Birmingham. It repurposes existing office buildings and cleans up polluted locations.

Founder Stephen Beech stated that if foreign investors were not there, the UK's chronic housing crisis would worsen. So, "British banks are uninterested in revitalization." It's too dangerous." Basil House, a restored 19th-century office structure in central Manchester, currently charges £2,000 per month for a two-bedroom flat with all costs included. "Students that live with us want to come back after they acquire their first job."

Beech is now focusing on family houses to diversify its income mix.

Manchester City Council has sought investment and created a collaboration with Sheikh Mansour bin Zayed Al Nahyan. He is a member of Abu Dhabi's ruling family and was the owner of Manchester City football club, in 2014. They construct almost 1,500 residences, most of which are for private renting.

The council also has a joint venture with Far East Consortium, a publicly-traded Hong Kong company engaged in London since 2011. Hence, it has just recently begun operations in Manchester.

Plans

Over the next 15-20 years, they want to develop up to 15,000 new houses in north Manchester. As a result, a fifth of them being "affordable" not otherwise provided by the market, as defined by the government. Property investment agents in London have some credit to look forward to.

Gavin Taylor is FEC director in Manchester. According to him the city's influx of blue-chip businesses made it an appealing area to invest in. These businesses include: Amazon, the BBC, and TalkTalk, along with business-friendly local leadership.

Press ESC to close.

© 2022 Trending News Wala. Published with MyDigital Crown & e10 Infotech

You've successfully subscribed to Trending News Wala
Great! Next, complete checkout for full access to Trending News Wala
Welcome back! You've successfully signed in
Success! Your account is fully activated, you now have access to all content.
Success! Your billing info is updated.
Billing info update failed.
Your link has expired.