UK property remains smart investment for SA’s despite Brexit uncertainty

Investing in property located in the “Northern Powerhouse” region of the United Kingdom is still considered a smart move – despite the Brexit uncertainty, affirms Gavin Smith, the Head of Africa at deVere Acuma, part of the world’s largest independent financial advisory organisation.

“While Brexit uncertainty continues to cast a shadow over the British business climate, the UK remains a highly attractive property investment destination,” he says.

“Underlying conditions in the broader economy continue to underpin the housing market and the UK still offers South Africans a financially stable and culturally familiar destination in which to buy property.

“Whatever the outcome of the ongoing Brexit negotiations, the UK will continue to be a secure place for South Africans to buy property, and in the long term, will offer positive growth,” observes Smith.

“In the short term, the political uncertainty, which has driven down the pound considerably, means that properties are more affordable, making now an ideal time to invest.”

Add to this the fact that many young people will never buy their own homes, and many UK residents are now part of “generation rent”, it is clear that those who can afford to invest in lettable properties can expect a secure, income-generating investment for years to come.

In particular, Smith highlights the so-called “Northern Powerhouse” cities, which are currently benefiting from a massive infrastructure and social investment plan by the UK government, as golden investment opportunities.

The plan involves upgrades to infrastructure and schools, as well as investment in technology businesses to assist the economies of cities including Manchester, Liverpool, Leeds, Sheffield, Hull and Newcastle to boom.

Recent research from CWJobs showed that a quarter of London decision makers would rather launch a new start-up in Manchester than in London, with the city’s world-class universities, including the University of Manchester, being a key attraction.

Leeds and Sheffield offer similarly promising educational institutions. Spiralling property prices in London, a more balanced lifestyle in the North and increasing numbers of businesses locating their headquarters outside of the capital are driving the desirability of these Northern Powerhouse cities.

The rental yield figures support this as well.

The average rental yield in Liverpool is around 5.05%, compared to a national average of 3.6%. In Manchester, M14, the area south of the city centre offers an average rental yield of 7.07%, while M13, the areas near the University of Manchester, offer an average yield of 6.89%. In Leeds, some areas achieved a high yield of 7.5% between 2017 and 2018. In Birmingham, areas around the city’s two universities had yields as high as 11.66% in 2018.

“It is clear that these cities are beating the national average for rental yields by some margin, while also offering far more impressive growth potential than one could expect in London,” says Smith.

“Another major reason to consider property investment in the UK is for diversification purposes. Diversification of your investments is the best way to mitigate risks to your wealth.”

But how does the UK stack up against other foreign property investment destinations?

Smith says that all of the factors that have always made the UK attractive to South African investors still hold true.

“The UK is almost in the same time zone as South Africa, which allows for ease of transaction and communication. It’s an easy overnight flight away should the need for a visit arise. It is English speaking, with stable legal and tax processes.”

“For all of these reasons, the UK remains an excellent investment destination for South Africans seeking security, growth and a hedging option.”

deVere Acuma offers the Elite Property service, providing off-plan, turnkey solutions for investors who aspire to include properties offering features like these in their portfolios.