As South African property investors continue to move more of their money to the UK, why
are fewer choosing to invest in London?
When it comes to overseas investment, South Africans have turned to UK property for generations. Returns in a rand-hedging currency. A diverse range of products in a market with a track record of producing high returns for investors. British bricks and mortar has long been established as a popular choice for an investor community looking to balance
domestic volatility with a portfolio-diversifying asset. Indeed the majority (36%) of South Africans with international property declared the UK as their preferred destination in a survey commissioned by IP Global Africa in March.
And it’s London that many naturally consider. Famous landmarks, luxury addresses and, crucially, a market renowned for delivering huge gains for overseas investors, the UK capital has been where investors have sought property more than any other city in the country.
The introduction of new British tax laws and the continued devaluation of the rand in international terms are making the overheated London property market even more unaffordable. Currently there’s just one city in the UK that possess the yields and capital growth prospects that stack up from an investment perspective.
That city is Manchester, named by online estate agency House .Simple as the UK’s property investment hotspot for the next decade – and the time to invest is now.
The UK’s highest yields
Last year HSBC named Manchester as the UK’s hotspot for property investment yields. Average annual returns from rental income in the north-west city topped the nationwide index at 7.98%, 1.5 times higher than the yields in the London borough of Newham, the best performing area of the capital.
When compared with Kensington and Chelsea, an area of London renowned for international property investment, Manchester’s yields are five times greater.
The UK’s highest rental demand and one of the lowest levels of supply
A country-wide generational shift means that just 63% of people in the UK now own their home, the lowest rate for 30 years. Renting is quickly becoming the norm, the chosen way of living – and nowhere is the demand for rental property more pronounced than in Manchester.
There has been an 85% increase in the number of households in Manchester’s private rented sector (PRS) in the last 10 years, and now the sector accounts for 28% of all households in the city. In London, the PRS accounts for 25% of all households.
Yet while demand may be high, supply of rental accommodation in Manchester is among the lowest in the country. There is a pipeline of just 8,072 new PRS properties in the city over the next four years, a number that cannot match the current demand for 8,600 PRS units each year in Manchester.
In July Select Property Group will host the 2016 Property Investment Masterclass to investors across the country. Follow the links below to find out more and register your attendance for your preferred city:
Cape Town- Wednesday 20th July: BOOK NOW
Durban- Saturday 23rd July: BOOK NOW
Johannesburg- Tuesday 26th July: BOOK NOW