What are the best UK cities for overseas investment?

As a global property hotspot, the UK is home to a number of thriving cities that are especially attractive for overseas investment.

Across the world, the UK continues to be an appealing location for overseas investment. And while London has traditionally been the top choice among overseas investors, foreign buyers are increasingly looking at other locations too.

A report published by law firm Irwin Mitchell in partnership with Cebr analysed the 50 biggest cities in the UK and ranked their current investment attractiveness in a new index. This is based on eight economic indicators in three categories, including growth potential, local infrastructure and local skills.

Inner London, London and Outer London took the top three spots in the Foreign Direct Investment (FDI) attractiveness index with a score of 79.8, 75.9 and 68.8 respectively. Brighton is ranked fourth with a rating of 50.8 and the highest growth potential, while Oxford follows with 49.1 and the highest rating for local infrastructure.

Greater Manchester takes the sixth spot with an index score of 45.6 and is home to the highest rating for local skills outside of London. And Birmingham follows closely behind with a score of 45.4. Edinburgh, Reading and Cambridge then round out the top 10 with scores of 44.4, 43.5 and 43.3 respectively. This shows the variety of regional cities that are the most appealing for overseas investment.

Highlighting the north of England

Recent research by Benham and Reeves also revealed that investors are driving an increase in second home purchases in more affordable regions, including the north east and north west of England. This signals that investors are targeting property investment in these areas in search of better rental yields.

Between the UK financial years 2020-21 and 2021-22, purchases of additional dwellings soared by 27% in the north east from 11,500 to 15,000 and 26% in the north west from 34,400 to 41,900.

The north east and north west are known for having strong yields, which is ideal for property investment locations. The high yields are in part due to lower entry prices, in addition to growing economies like Manchester and Liverpool.

Manchester saw 1,800 more second home purchases between 2020-21 and 2021-22, a 39% rise. And Liverpool recorded a 37% increase with 800 more purchases of additional homes.

Marc von Grundherr, director of Benham and Reeves, commented: “Making strong returns as a second home investor is no longer a guarantee, so it appears that more are prepared to look further afield by purchasing homes in the regions where yields are stronger due to the lower initial cost of purchasing a property.

“Manchester and Liverpool have been popular for some time, though growing interest in North Eastern towns like Hartlepool and Middlesbrough has been aided by low house prices.”

Finding the right overseas investment

The most prominent overseas buyers in the UK are from Hong Kong, Singapore and the US. Many find the overseas investment landscape especially lucrative, and this has been heightened by the ongoing favourable dollar-to-pound exchange rate, providing discounts for buyers.

The UK housing market is proving to be an exciting property investment hotspot as the sector has remained robust throughout economic and political challenges. And with strong long-term prospects, particularly in certain regional areas of the UK, overseas property investors continue to have confidence in UK property.

In terms of finding the ideal overseas investment property for your preferences and circumstances, many US investors opt to work with an agent or property investment specialist. This is similar to how US property is sourced by buyers – through a realtor. Agents and property investment specialists have important local knowledge to help investors find the best overseas investment option for them.

BuyAssociation has experience helping overseas investors access the UK property market for the past 18 years. Get in touch to learn about our current investment opportunities and how we can help you invest.

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