2020 – What’s in Store for UK Property Investment?

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2020 – What’s in Store for UK Property Investment?

To say 2019 was a turbulent year is an understatement. Brexit aside, the world has plunged into turmoil as we head into 2020. Conflict in the Middle East has resurged while on the other side of the planet, Australia burns to the ground in the most extensive bushfires in the country’s history.

That said, Brexit is set to dominate UK market performance again in 2020. The path forward appears clearer following the Tory election win, if not the full economic consequences of the UK’s departure from the European Union.

With a new Conservative government enjoying a majority in parliament and the passing of Brexit withdrawal bill, all eyes are on what will happen to the UK real estate market in 2020. Expectations are for a departure from the EU at the end of January. Will this finally spring the country’s commercial property back to life?

A Return to Certainty to Boost UK Property

According to Will Matthews at Knight Frank, business is always looking for certainty and the conservative majority in the general election will create a more certain environment, with the UK leaving the EU.

“We might then witness a flurry of activity at the start of the year, as there is a great deal of pent up demand for commercial real estate that just needs a bit of certainty to be realised, Matthews who heads the head of UK commercial research says.

There is considerably more optimism in the UK housing market as we head into 2020 after hitting rock bottom in August last year, when it hit the weakest point since the global financial crisis. At the time, Savills said fewer houses were sold in the UK in the first half of 2019 than at any point since the first half of 2009.

What Will UK Investors Do in 2020?

Aside from property, investors are getting more adventurous in terms of asset class, a trend that is expected to continue throughout 2020. This is mainly to allow them to diversify from buy-and-hold property investments into short to medium-term products. This acts as a hedge against inflation and serves to protect capital through periods of uncertainty, and the UK is still not entirely out of the woods on that front.

Investors are most likely to increase investments in the UK, Asia and emerging markets, according to a survey by AJ Bell of 1,400 of its customers. The US, Europe and Japan are likely to get less of their cash, and Europe is the least favoured in terms of performance next year.

Some 40% say they will invest more in 2020, 47% intend to invest about the same amount, and 13% will invest less, the research found. Among sectors, investors are most disposed to put money in financial and legal technology products next year, followed by infrastructure and utilities, while mining, oil and retail firms are likely to remain largely below the radar.

Regions to Keep an Eye On

As a consistently high-performing asset, property will continue to attract investor interest in the UK throughout 2020 and beyond. However, whereas most investment action has been focused in the capital in recent years, investors are moving into the regions in force.

According to a Hometrack report, Liverpool, Birmingham and Cambridge have shown the highest growth for any city in the UK. With plenty of regeneration projects heading into 2020 and beyond, both Birmingham and Liverpool appear to be the most obvious choices for a robust property investment.

There is particularly strong growth potential in Birmingham, the most populous city outside of London which has recorded property price increases of 224% since 1999. It’s also one of the youngest cities in Europe, making it a popular location for young professionals looking for city-centric living.

From world-class transport amenities such as HS2 and the Midlands Metro Expansion to an exciting development pipeline that includes Arena Central, Paradise and Birmingham Smithfield, Birmingham is creating high-quality, A-grade residential, commercial and leisure spaces designed to meet rising demand for property in the City.