UK Real Estate Inquire about UK Real Estate

Country data

Location: Located in Western Europe; made up of a set of islands including the northern 1/6 of the island of Ireland. The islands are found between the North Atlantic Ocean and the North Sea, northwest of France
Size: Total area is 244,820 sq km (slightly smaller than Oregon)

Population



Population growth trends and forecast: London has been growing rapidly in terms of population figures primarily due to migrant inflows. London’s population has grown over ½ million over the past decade

Major Exports: Manufactured goods, fuels, chemicals, food, beverages, tobacco, basic materials
Real Estate market

Basic overview:

  • Strong preference for homeownership
  • Extremely mature mortgage finance and banking system
  • UK residents are accustomed to high levels of debt
  • The housing boom made a lot of regions extremely unaffordable (notably Northern Ireland and London)

Current value

  • Price/sqm : €19,094
  • Rent/month: €7,862
  • Rental Yield: 4.12%

Recent trends or stats

  • Undergone an extremely long housing boom (since early 1990s)
  • Rents have fallen in 2008, however, they have stabilized for 2009, keeping yields higher as capital values have fallen
  • Housing starts (new housing supply) has fallen for the last 3 years

Future trends:

  • Distressed opportunities will continue for a period of time
  • While London prices have fallen, there will still be price resistance in the future as there is still strong migration trends into the various London boroughs and in other prime locations in the UK
Economic
Overview

What is driving the market?

  • Global financial hub (London)
  • Talented labour force with strong migration trends (especially in London)
  • Services based economy with many companies using the UK as its European based headquarters
GDP

Current: UK has fallen into a deep recession after the longest postwar boom
Recent trend: Average annual real GDP growth for the period between 1997 to 2007 was 3.2%

Future trend: The UK will be in a deep and protracted recession which should last for several years as it had undergone the bursting of one of the largest asset bubbles in recent history. The financial/banking system will have to stabilize before an economic recovery is made
Inflation



Current: Inflation is declining at a rapid pace due to lower demand and slower economic growth, if the recession drags on for a long period of time, deflation fears could arise
Recent trend: Inflation had been more volatile in the past 2 years than in the past decade, primarily due to rising commodity, food and energy price

Future trend: The central bank’s monetary easing, quantitative easing and the depreciation of the GBP could offset the deflationary fears and cause inflation to pop up sooner than expected

 
Employment (Labor)

Current: 2008 unemployment 5.55%
Recent trend: The UK had become a major financial/banking/services based business hub, containing a highly skilled workforce and attracting strong foreign talent, particularly into London

Future trend: Unemployment expected to rise until the banking system is stabilized
Foreign Trade

Current: Imports = $645.7B and Exports = $468.7B
Recent trend: The UK is one of the biggest trading nations in the world. The main destination for UK exports is the EU, followed by the United States

Future trend: EU membership will provide a benefit for the UK in terms of foreign trade as the economies in ‘emerging Europe’ pick up activity

 
Currency

The currency used in the UK is the Great British Pound (GBP). As of May 12, the GBP was worth $1 USD = GBP 0.656. To view current exchange values visit www.xe.com
Interest Rates
  • The Bank of England uses interest rates to control inflation
  • The interest rates have been cut steadily to counter slowing growth since 2008
  • The Current Bank Rate is 0.5%, the lowest level in history
FDI

Current: The UK has an open and welcoming attitude towards foreign direct investment.

Recent trend: In the recent past, the UK has been a large recipient of FDI primarily due to the strong legal framework.

Future trend: UK (and London in particular) will likely continue its trend of attracting foreign talent and foreign capital as an advanced services based center.