While I certainly don’t think that the UK property market will rebound significantly in the next 12 months there is currently a small window of opportunity for foreigners to gain a foothold in the UK market. Severe undersupply of rental properties, coupled with low interest rates and a weak pound exchange rate have created the ideal environment to invest in distressed property. With current rental yields the highest in 20 years and 5.5 tenants competing for every property, investors cannot afford to miss out. Mortgage borrowing continues to be difficult for domestic Brits and it is expected to remain over the coming 12 months, further exasperating the high demand for rental properties.
Over the coming year, interest rates are expected to remain low which gives great yield opportunities for foreign investors. However, the biggest factor for me is that we are still able to purchase at significant discounts to 2008 prices at least for another year. Nevertheless investors need to act fast as these distressed properties are being snapped up quickly and as a result there are fewer and fewer distressed investment opportunities.
We have an outstanding investment opportunity in the Tower Hamlets which is the best performing district in London recording a 18% increase in rents already this year. Tower Hamlets is currently undergoing an enormous regeneration project and investors have the opportunity to purchase from just GBP400 – 600 per sq ft. Our development is a short 5 to 10 minute commute to London’s square mile and is exceptional value with the properties already tenanted, providing investors with an income earning property from day one of ownership. Tenants include doctors, lawyers and architects who earn an individual income in excess of GBP30,000 providing a stable rental income and yields of over 5%. These are the kind of properties which get bought up very quickly by domestic investors; however the current market climate has created a small window of opportunity for foreigners to invest in decent stock at a reasonable price point.
I am particularly bullish about this area of London, this is not Canary Wharf where there is a massive over supply with thousands of units on offer, this is the real heart land of central London and a short commute to the city centre. This is the type of property investors should be purchasing in during the current fragile economic climate.
IP Global Founder and Managing Director
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