Global investors decide to “look for value” and have spent $11 billion less on property in London over the last 12 months
Just under £20 billion was spent on bricks and mortar in the British capital in the 12 months to June 2016. It represents a 36% fall in spending over last year’s £30 billion, with London losing its ranking as the number one most invested-in global property market and dropping to third behind New York and Los Angeles.
Although global investment as a whole fell by 5.7% collectively, following a 2015 of high activity, it appears more investors are turning their backs on London.
Prices were already reaching an affordability ceiling in most parts of the capital, and then the vote to leave the European Union created immediate uncertainty for many investors and speculators who wondered what the result would mean for the country’s financial centre.
“The market has clearly paused for breath after a busy 2015,” said David Hutchings, Head of EMEA Investment Strategy at commercial real estate firm Cushman & Wakefield. “Indeed, with the scale of change underway in the macro environment – from war to disease to Brexit to Trump – many investors are now struggling to decide what comes next and where they should look for value.”
However, many investors have identified the opportunity of buying UK assets while the pound is currently at a 31-year low. Manchester, the city with the highest yields in Britain, is becoming a hotspot of investment activity, driven by greater affordability and its ability to deliver strong regular returns during times of volatility in other investment markets.