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Is The Euro Crisis Good News for the UK Property Investment Market?

Due to today’s global market conditions, the astute investor is in search of more stable investment opportunities such as bricks and mortar rather than stocks, shares and currency because of unpredictable fluctuations caused by the on-going Euro crisis.

Residential property investment has always been popular as people like to own homes, and in many cultures owning property is a sign of wealth and security.

History also shows that overtime, most property investments will appreciate in value due to inflation, economic growth and strong demand if the property is in a desirable location.

UK Property Market

The UK property market – London in particular – is thought of as a prestigious location for property investment by wealthy foreigners, with many investors believing that Britain is a ‘safe haven’ for property investment.

For those looking to enter UK property investment, real estate prices are fairly low due to the economic downturn back in 2007 / 2008 meaning investors can acquire houses at bargain prices.

In many UK cities such as Liverpool, Manchester, and some parts of greater London, investors can purchase homes for around 30% – 40% below peak market value, making for attractive buy-to-let and capital growth opportunities.

UK Property Investment

It has been recently reported that due to the current Euro crisis many people in EU countries are putting their money into the UK, and specifically the property market.

Reuters reported than an increasing number of investors from Spain and Greece are buying into the UK property market due to the continual uncertainty over the Eurozone. Stating a 39% rise in the number of Greeks seeking property in the UK valued at over 1.5 million, a lot of these properties being purchased are likely to be in London.

“What we are seeing is another stage in the euro zone crisis gathering pace. It’s ironic that the more instability you get in the euro zone the more the UK property market benefits,” Liam Bailey, head of residential research at Knight Frank told Reuters.

London Property Investment

As we know one of the keys to successful property investment is the location and London being one of the most famous cities and financial centres of the world is the location of choice for many.

A recent article published 23rd May 2012 on the Motley Fool called ‘Profiting from central London property’ highlighted the current trend of Europeans putting their money into the UK property market. One of the points the article made was as follows:

‘Many rich French citizens are currently voting with their feet by moving to Britain following the election of François Hollande as President of France under a platform that included a 75% top rate of income tax. This will provide yet another spur to the demand for central London property.’

This quote further reinforces Reuters report that a lot of the property buying activity is indeed from EU country residents, but the EU is not the only place UK property investors are coming from.

Investors from further afield including the Middle East and Asia are also heading to the UK, and specifically London.

“The London Property market continues to draw investors from around the globe, we have a growing number of foreign investors from not only the EU but further afield as the Middle East, Hong Kong, Singapore and Malaysia. UK property sales agreed in Q1 of this year are up by 42% from last year and a large amount of this business is from overseas investors.

This is reflective of the confidence that foreign investors have in the London property market in the back drop of a Euro Zone in crisis. The influx of foreign investment has also meant that the amount of equity in the UK has increased which makes for a more stable market,” stated Jerald Solis, Business Development Manager at Experience International.

Experience International is a specialist property investment company based in central London who sells London hotel room investments, London student accommodation investment and other Income generating assets in the UK.

Summary

It appears that the Euro zone crisis is forcing a growing amount of people to move their money away from the Euro into safe havens. The UK and London property market are directly benefitting from this and the fact that London is host to the Olympic Games this year as well as the Queen’s Diamond Jubilee will mean additional global exposure for the city.

The UK has reinstated itself as an international hotspot for property investment, with the London property market directly benefiting from the current Euro crisis due to the growing number of wealthy EU residents placing their money into the safety of UK bricks and mortar.

Article provided by Luke Fitzsimmons

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