An overwhelming 96 per cent of UK real estate investors are eyeing the domestic property market as a priority in 2020, according to recent research by leading audit, tax and consulting firm RSM.
Real Estate 360, the annual survey of more than 250 c-suite real estate investors, found that ‘home advantage’ will define the habits of UK property investors over the next two years, prompted primarily by the advent of a growing domestic economy and a clearing political climate.
Conversely only 10 per cent said they’d prioritise European investment, with 54 per cent believing that overseas markets weren’t attractive.
Howard Freedman, partner and national head of real estate at RSM, comments: ‘What a difference a year makes. The economic and political landscape has changed for the better since we ran our last survey. And it seems 2020 will mark the first year since early 2016 in which investors will start putting their money where their mouth is. The Boris bounce has served as a factor, but so too have wider global indicators which have influenced UK investor appetite to eye domestic assets closer to home.’
Whilst London will remain the UK’s commercial and residential property powerhouse, the regions are gaining ground at an increasing pace. Asked where the greatest commercial yields were to be found outside of London in 2020, the West Midlands came out on top on 89 per cent (up 10 per cent on last year), followed by the North West on 86 per cent (an 11 per cent jump), and then Yorkshire on 79 per cent (a marked 18 per cent hike).*
In terms of residential yields outside of London, Scotland topped the bill on 77 per cent (up by 10 per cent), then the East of England on 75 per cent (a 13 per cent rise), followed by the North West on 73 per cent (up 12 per cent).*
Howard Freedman comments: ‘The marked increases in sentiment around yield prospects outside of London is partly driven by investors shying away from what remain attractive yet slowing yields in the capital, combined with the prospects afforded by government led growth initiatives and major transport links such as the Northern Powerhouse, HS2 and Crossrail.’
18 per cent fewer people than a year ago believe that real estate funds will spend significantly outside of London over the next 12 months. Funds were down from the most popular a year ago, to fifth on 34 per cent, behind high net worth individuals (45 per cent), institutional investors (42 per cent), UK private companies (41 per cent) and UK REIT’s and publicly listed companies (37 per cent).*
Asked about which sub-sector will experience the most growth in 2020, 51 per cent felt that the private rented sector would come out on top.
71 per cent surveyed had used bank loans to finance property acquisitions in 2019. Asked about which sources of finance had been most readily available, 53 per cent viewed alternative funding such as debt finance as most accessible, whilst 41 per cent saw private equity as such.
*recipients asked to name top three