To find out how much foreign investment in the UK has impacted the country’s property market, all you need to do is look at property market statistics over recent years.
According to official Land Registry data, the average UK property price has soared by over 173.93%, increasing from £97,964 in 2001 to £268,349 in 2021.
This figure is now at £285,000 as of March 2023.
This shows that property prices in the UK have almost tripled over the past 20 years, which is thanks to the increased levels of foreign investment in UK property.
If there hadn’t been such a high number of investors buying property in the UK from overseas, the UK average was estimated to have been just £174,000, which would result in a lower value-added to percentage increase.
With UK property prices now standing at around £285,009 and expecting growth of up to 6.2% by 2026, the impact of foreign investment in the UK is set to continue further down the line.
Huge Student Market Investment From Foreign Investors
Real estate is a hot commodity for many international investors, with UK property offering lower prices and higher rental yields than many other locations like China and Hong Kong.
This is particularly true for the student property market, with many buyers, particularly from China, choosing to buy student accommodation to house their children during their studies.
A report from Savills in 2021 found that over £5.77 billion was spent on purpose-built student accommodation in 2020, which Savills says is a sign of continued confidence in UK real estate to deliver high returns.
The same report shows that the number of UCAS applications in 2021 increased by 8.4% over 2020, with non-EU applicants rising by 17.1. This is significant for investors, as international students are more likely to live in PBSA, with Chinese students around 2.2 times more likely to live in PBSA.
Chinese investment in UK property in student cities like Liverpool and Manchester has become increasingly popular, as one in five students in the University of Liverpool is Chinese.
These interests also extend to cities like London, which are huge for commercial Tips for property investment projects. In fact, £3.69 billion was spent by Chinese buyers on commercial real estate in London in 2017 alone.
The Impact of Brexit on Foreign Investment in the UK
So, what about the impact of Brexit on foreign investment in the UK?
Well, it’s been mixed news for the UK following the Brexit vote. The amount of foreign direct investment has undoubtedly decreased since 2016, with the annual rate of job creation and the number of inward investment projects dropping.
However, this may not entirely be due to Brexit, with 2017 seeing the highest levels of FDI job creation of 75,968 jobs – one year on from the Brexit vote.
Also, while FDI projects dropped to 1,782 in 2018/19, it increased by 4% by 2019/20 – suggesting that Brexit may not be the cause or that the level of inward UK investment hasn’t been as impactful as first thought.