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UK versus Europe – where to invest as Brexit unfolds

UK versus Europe - where to invest as Brexit unfolds
  • Currency fluctuations put volatility at the heart of many sectors (easyMarkets)
  • UK property investment offers exciting opportunities in new sectors (Properties of the World)
  • Spanish property investment provides long term lifestyle benefits (Kyero.com)
  • UK’s fundamental shortage of housing unaffected by Brexit (Aspen Woolf)  

The UK will be very publicly facing off against the EU over the coming two years. Whether you voted for or against the split, the political and financial implications of the UK’s decision to leave the EU are huge. Now, Prime Minister Theresa May has called a snap election called for 8 June, in order for the Conservatives to take advantage of their largest lead in the polls over Labour in nine years (according to YouGov). Sterling’s turbulent journey since the Leave vote doesn’t look set to enter calmer waters anytime soon.

“Sterling will be one of the most responsive barometers to the political machinations of the Brexit process. While many sectors will be affected by the UK leaving the EU, few react in real-time in quite the same way that currency markets do. The impact of changes in the pound’s value is felt in myriad ways, putting volatility at the heart of many sectors over the coming years.”

UK versus Europe - where to invest as Brexit unfolds2

James Trescothick, Chief Global Strategist, easyMarkets

Property investment is certainly one sector that is sensitive to sterling’s shifting value. So should buyers be looking to pick up property in the UK right now, or investing their funds elsewhere? Sector experts’ opinions are divided.

“Those buying in pounds may find their second home overseas is suddenly worth a great deal more – or less – as the pound and the euro dance around each other. The same is true of the pound and the dollar, with the US experiencing its own unique style of political upheaval right now. UK buyers seeking stability from their investment might find it prudent to seek out domestic property investment opportunities over the next couple of years.”

Jean Liggett, CEO of visionary property investment consultancy Properties of the World

Liggett points out that domestic property investment still offers a wide range of opportunities. The UK’s hotel and care home sectors are offering some of the most exciting property investment possibilities at present.

While UK hotel investments often come with the benefit of two or more weeks’ use per year, many investors want a property that comes with the promise of sunshine, and continue to look overseas to make their money work for them.

“The fact that investors can pick up a property in Spain, use it themselves whenever they want, then leave it to their children as an inheritance or sell it a few years down the line, means that many British buyers are looking beyond short term currency fluctuations and pushing their pounds into properties in the Spanish sunshine. UK visitors to Kyero.com surged by over 30% in the year to March 2017, demonstrating that many are looking at investment in Spanish second homes over the longer term. The comparatively low cost of property in Spain also means that UK buyers can get more for their money when they invest abroad.”

Richard Speigal, Head of Research at Spanish property portal Kyero.com

For those seeking a purely financial investment, with no lifestyle benefits attached, the stability offered by buying in pounds is certainly a strong draw at present. The UK’s buy-to-let sector continues to perform well and the nation’s city centres look set to remain short of homes for many years, irrespective of Brexit.

UK versus Europe - where to invest as Brexit unfolds3

“The UK’s decision to part ways with the EU does nothing to change the fundamentals of this country’s housing shortage. That shortage, along with a shift from ownership to renting, is driving demand for city centre homes like never before – and Brexit has done nothing to change that. Each year the UK falls further behind its target number of homes and until that alters, the logic of domestic buy-to-let investment is clear.”

Oliver Ramsden, Director of  Aspen Woolf

Ultimately, then, the decision on where to invest as the Brexit process unfolds will depend on the kind of benefits that individual property investors are seeking to get out of their investments, as well as how short or long term their outlook may be.

On the market:

Gramont House – care home investment from £75,000, based on a sustainable and ethical business model. 8% NET returns for 25 years, with four exit strategies and two purchase options. (Available through Properties of the World)

Alicante penthouse – three bedroom, two bathroom penthouse apartment with large pool and tennis court on site. 600m from the beach. €185,000. (Available through Kyero.com)

Eldon Grove – a refurbished, Grade II listed building housing 45 one, two and three bedroom apartments. Designed by experienced and successful architects. Prices from £94,950 with 7% NET yield assured for two years. (Available through Aspen Woolf)

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