Although property in London remains a firm favourite with UAE-based investors, the latest Global Real Estate Outlook, by IP Global, has shown that investors are now exploring the UK’s regional cities of Manchester, Birmingham and Liverpool due to their high rental yields and capital growth.
Twice a year, the Global Real Estate Outlook analyzes the viability, performance and future potential of residential property markets in cities, globally. This September, the UK’s regional cities are making a compelling investment case as their steadily growing economies and populations have led to rising house prices. Looking further afield, new cities within Europe, such as Lisbon and Stockholm as well as Dusseldorf and Frankfurt in Germany, have featured in the report as attractive investment opportunities.
Richard Bradstock, Head of Middle East at IP Global, commented, ‘In the Middle East we have experienced a shift in investor behaviour. London has always been a popular choice for overseas investors and today, factors like its chronic housing deficit and the government’s increased spending on infrastructure, mean that the city remains appealing as property prices continue to rise.
Yet, UAE residents who are looking for more affordable options, with greater returns over a 5-10 year period, are now exploring regional cities and the commuter belt of London. Finally, outside of the UK, IP Global are now also championing cities within Central and Western Europe that are now thriving with the boom of entrepreneurship and the eruption of start-ups.’
The Global Real Estate Outlook revealed Outer London as a solid global investment choice. The launch of the Elizabeth Line (Crossrail), the massive infrastructure investment that will transform the city by carrying 200 million passengers annually, will drive growth across the capital – unlocking new pockets of value. London is also experiencing an enduring housing deficit and so once the Elizabeth Line is completed, property prices along some parts of the Crossrail route are predicted to rise by up to 20%, as supply cannot meet demand.
Another new entry, Birmingham - the second largest city in the UK in terms of population with a reputation of being a leader in education - is also showing strong investment potential. It continues to thrive due to its 20-year Big City Plan, which includes a GBP1 billion public sector investment designed to improve the cities transport and digital infrastructure, resulting in rents rising 24% in Birmingham City Centre in the past 12 months. Further north, Manchester is becoming a popular choice for investors as the lower property prices make for a more affordable option and yet property prices are forecast to increase by 28.2% from 2017 to 2021.
Internationally, there is also appetite for property in Chicago. America’s third-largest city is both an important financial and technology hub with 34 Fortune 500 companies calling the city home. What makes Chicago such a persuasive investment opportunity is its impressive financial performance as house prices have increased by 36% in the last five years and rents have experiences an upward trajectory as well, increasing 10% between 2016-2017.
Germany is also catching the interest of UAE investors for a number of reasons – including the fact that there’s no capital gains tax on properties owned for ten years or more. Of note, Hamburg, with its swelling population and USD15 billion regeneration of Hamburg’s HafenCity – the largest in the EU to date – has resulted in 70% house price growth since 2009. Elsewhere in the country, Frankfurt, a global financial hub, is experiencing a population and employment growth spurt, contributing to an average house price increase of approximately 40% between 2009 and 2016.
Ranked after Silicon Valley as the world’s most prolific technology hub, Stockholm is being viewed as the next investment hotspot, as it produces more unicorn companies (private start-ups valued at over USD1 billion) per capita than any other city in the world after Silicon Valley. Another city IP Global is approaching with caution is Lisbon, which, with its low cost of living, wealthy population and great lifestyle is being touted as ‘The New Berlin’. Although originally affected by the economic crisis, its government’s strategy to regenerate the city to attract entrepreneurs and property investors has meant that house prices have risen by 30% between 2013 and 2016.
The Global Real Estate Outlook by IP Global can be accessed here.