Investor Interest in London and The ‘Big Six’ Cities Still Strong  

This week, our exclusive Q&A session is with Chris Dietz of Leading RE and we ask for his expert opinion on the level of international interest in the UK property market and what Brits should consider when buying and selling.

Hi Chris, please tell us a little about yourself and Leading Real Estate Companies of The World (LeadingRE).

I am the executive vice president of global operations for Leading Real Estate Companies of The World and have been with the company for seven years. My background is in corporate relocation services, prior to which I studied law in Germany and France. My role is to expand Leading RE’s model and reach beyond the US; currently I travel primarily between the APAC region (Asia Pacific) and the EMEA region (Europe/Middle East/Africa) working with, and learning from, estate agencies across these regions. Leading Real Estate Companies of The World is a selective global community of the highest-quality independent real estate companies, with over 565 companies and 130,000 sales associates currently in 70 countries. 

The property market around the globe must vary a lot - where does the UK stand in the 'league table'?

The UK in itself is two markets; London must be separated from the rest of the country when considering this question. London has always been a safe haven for investment and as a result is on par with other major global wealth centres, such as New York, LA, San Francisco, Singapore or Hong Kong. The rest of the UK is an interesting market and we are increasingly seeing investment from abroad. As a result, the UK remains very high in the global league table.

Are you finding a lot of international interest in new homes in the UK to live/invest in?

There is definitely interest from international investors and increasingly this is being directed outside of London. The capital’s market may have experienced a slow-down in recent months, but property remains very expensive. International investors seem to understand the dynamics of the regional markets and are attracted to the second-tier cities because they offer the opportunity to acquire prime properties with attractive yields relative to London and their home markets. For those who want ‘more for less’ the regional markets are proving popular.

What are the hotspots?

Certainly London. But I would say that in general the UK’s ‘Big Six’ cities – Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester are seeing interest particularly from the European mainland and the Middle East, but increasingly from Asian investors.

Do you see a lot of UK interest in overseas homes, and where is the most popular target?

I think the European ‘sun belt’ around the Mediterranean Sea will always remain popular for UK buyers, particularly those purchasing as owner-occupiers, as will specific pockets of the US, such as Florida. Spain and France are leading the table for those who dream of packing up and moving abroad to sunnier climates or looking for a quick weekend getaway. However, second-home and investor interest has waned of late, almost definitely as a result of Brexit. In the short term, Brexit-triggered currency movements have negatively impacted British buyers’ ability to afford a foreign property in popular destinations in Europe and the USA. Long-term ramifications could be around the issues of visa requirements, freedom of movement, taxation, currency restrictions and capital flow controls.

What do you think are the main points that buyers should ask of estate agents?

I would always start by asking an estate agent what certifications they hold. It is not a legal requirement in all countries for estate agents to hold professional accreditations, so this is always worth checking. This is important to ensure that your agent will act professionally and has a thorough understanding of the buying and selling process.

Are traditional agents generally doing well against online/hybrid competition?

It is hard to judge this as we are still very much in beginning of the battle between online and traditional estate agency. Ultimately, buyers and sellers do want to conduct the transaction through a human being whom they can hold accountable and reduces the risk of a costly mistake. Agent means insurance! However, online competition is waking up traditional agents and encouraging them to readdress their business models, which is certainly a positive. Agents must match their services with millennial buying behaviour, which in many cases will mean dramatically updating traditional ways of working. Technology is used to automate processes and increase efficiency, not to replace people. Globally, I believe, in five years the industry will look similar, but more fragmented, with more consumer choice including FSBO (for sale by owner), traditional agents and online agencies.

How might Brexit change our relationship with the European property market?

Although we have constant news coverage of negotiation meetings, we have very little information of what is being agreed, relying only on speculation. As a result, without a crystal ball, it is impossible to know how Brexit will affect ease of investment into and from the rest of Europe. However, the UK will remain a destination of choice for a lot of the international community which remains a very important factor in where investors decide to buy real estate. Especially for London, the city remains a top destination due to its security and overall quality of life.