Real Estate Investor Magazine South Africa April/May 2019 | Page 56

OFFSHORE INVESTMENT
UK property an
excellent investment,
despite Brexit fears
Even with the uncertainty around Britain exiting the
European Union, UK property remains a sound investment.
I
nternational property expert and founder of Hurst &
Wills, Lisa Bathurst, says that thanks to other economic
factors being positive, the challenges around Brexit will be
short lived. ‘All signs are that the UK is going to come out of
this stronger than ever,’ she said. ‘The London Stock Exchange
share price is up, unemployment is at a record low, interest
rates remain low and foreign investment into the country is
higher than it has ever been,’ she says.
‘With the slightly devalued pound, now is an opportune
time for South Africans to diversify their assets and hedge
against the uncertain rand. Post-Brexit, the GBP is likely to
get very strong, which is expected to drive up property prices
in the best locations,’ she said.
• Under supply of housing in the UK
‘Brexit or no Brexit,’ says Bathurst, ‘there is a chronic
undersupply of housing in the UK,’ she says. The UK
government has identified a need to build 340 00 houses to
keep up with demand. Yet, the country experiences a short fall
of 40 000 homes a year.
• Record foreign investment into the UK in
2018
‘Brexit isn’t putting off foreign investors, in fact, foreign
investment into the UK rose to the highest level ever recorded
last year (2018),’ she said.
‘In spite of any uncertainty around Brexit, South African
companies are also looking to the UK housing market for
returns at this time, says Bathurst. She cited WBHO’s, one
of SA’s largest construction companies, nearly R700million
investment into Manchester-based contractor, Russells
Construction and Russells Home, Hurst & Wills UK partner
companies.
• London stock exchange is thriving
According to the Economist, despite banks talking about
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APRIL/MAY 2019 SA Real Estate Investor Magazine
shifting jobs and assets out of London, Brexit is doing little
to perturb the London Stock Exchange. Last year the group’s
revenue grew by 8% and its operating profit by 15%. Its share
price is up by 22% since December.
• UK consumers increased borrowing in Jan
‘UK consumers increased their borrowing in January,’ says
Bathurst. ‘This is a positive sign that Brexit uncertainty hasn't
suppressed local Britons’ appetite for debt-funded spending.’
• British universities are thriving
British universities saw their best ever placing in the QS global
university rankings this year, ranking highest in 13 subjects, up
from 10 last year. “This is important as student accommodation
is one of the largest growing property asset classes in the UK
and one we are very excited about,” said Bathurst. “Our clients
are seeing excellent returns on investments into purpose-
built student accommodation in cities like Manchester and
Newcastle-under-Lyme,” she said.
• UK is a top investment destination for
infrastructure investors
The 2019 edition of the EDHEC Infrastructure Institute
survey, ranks the UK as third for countries with the most
potential for private infrastructure investment over the
next five years. The study was done for the G20 countries
all with advanced infrastructure markets. ‘The more than
300 international investor respondents, who represent
US$10trillion in assets under management, clearly do not feel
that Brexit has negatively impacted the UK as an investment
destination,’ says Bathurst.
‘These are all extremely positive signs that prove Brexit is
not having the negative impact on the economy that many
people feared it would,’ said Bathurst. ‘We are advising our
South African clients to look to property in the UK, especially
the Northern cities while the pound is slightly devalued.’