Insight – why are international investors piling into the North West’s BTL market?

10 March 2021 | Investment

This could grow much higher this year, with a December 2020 article by the South China Morning Post stating that the November Covid-19 lockdown and rising cases in the UK had tempered interest in British property from Hong Kongers before an anticipated January visa floodgate.  

Since the end of January, the UK government has been accepting applications from British National (Overseas) passport holders – also known as BNO passport holders – and their immediate family for a special class of visa that puts them on the path to UK citizenship.

In the lead-up to this new special visa process, interest among Hong Kongers in the UK property market had soared, with London-based agency AWS Prime witnessing an increase in enquiries, while the Battersea Power Station project chalked up more sales from wealthy Hong Kong buyers.

In the South China Morning Post article, Kevin Bowers, a Hong Kong-based lawyer at Bowers Law, said: “At the moment [December 2020], it’s a trickle because of Covid-19. I expect the flood to start again and anticipate thousands of applications for us.”

London and the South East are still attracting the highest level of investment from Hong Kong buyers and investors, but other major cities are following closely behind, including Manchester and Liverpool. Generally speaking, investment property in these regional cities offers more value for money and potentially lucrative returns in the long-term through capital appreciation.

For its own part, Thirlmere Deacon has seen demand for BTL property soar in the North West by more than 50% over the last six months, with the largest spike coming from international investors, up 35% year-on-year.

Stuart Williams, founder and chief executive of Thirlmere Deacon, says: “We have seen a rise in Hong Kong investors in the region, together with those from the Middle East and Asia. The UK property market is highly attractive to international investors as it is robust, despite the pandemic, Brexit and the economic uncertainty.” 

He argues the attractive returns on UK BTL property is driving foreign investment in the North West, with international investors able to acquire a high-quality three-bed apartment in Manchester which will house students and professionals from £297,000, with an annual rental yield of 7% gross (approximately £20,790) and capital growth of around 4% per year. 

“Location has been key during 2020 and this theme will continue into 2021,” Williams adds. “Large cities away from the capital have seen increased interest, but there are other locations that are well worth considering that can offer better value for money and exciting prospects.” 

He points to Newcastle as one of the fastest-growing cities in the UK, with over 14,000 new jobs expected over the next 12 years and the city’s population projected to reach over 310,000 by 2030, while the North East region’s population is projected to be 2.75 million by 2030. 

Famed for its energy, love of football, friendly atmosphere and nightlife, Newcastle was recently listed in PwC’s Good Growth for Cities report as one of the UK’s top 5 most improved city regions. Economists are also predicting that, throughout the 2020s, thousands more jobs will be created in the city.

“So, Newcastle is a great place for BTL investors as demand for quality rental accommodation is very high amongst students and young professionals,” Williams continues. “Our development, Newcastle Central Apartments, is located in the very centre of Newcastle at one of the city’s most exciting locations which is currently in the throes of considerable regeneration.” 

He adds: “This prestigious apartment building is ideally located for those working or studying in the city, within walking distance of train stations, shopping centres, several hospitals and under 1km from both of the city’s universities. Originally built as an office development, it is now the subject of a visionary multi-million-pound conversion scheme that will create 152 top-quality apartments.”

Thirlmere Deacon, which boasts over 40 years of combined experience in the UK property sector, has over the last decade seen its team sell more than £300 million worth of property throughout the UK, in many of the major cities including London, Manchester, Belfast, Birmingham, Liverpool and Leeds.

Despite concerns about the death of buy-to-let, or people being turned away from this type of investment in the future, Williams recently argued that BTL is still very much worth doing if you do it right.

Last year, Francis Ribeiro, senior portfolio manager at Thirlmere Deacon, meanwhile offered some top tips to seasoned investors looking to scale their property portfolio. You can see his tips here

This post has originally been featured in Property Investor Today.