Pivot Finance

UK property is still where to put your money



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While Brexit continues to dominate the airwaves, the predicted exodus from the UK’s property market hasn’t stopped all manner of big deals happening.

As a variety of foreign investors are closing in on Quintain’s mammoth £2bn Wembley residential scheme, one of the decade’s biggest commercial property deals looks set to be completed as Samsung’s life insurance arm sells a £425m office building to Singaporean investors.

 Such big sums are a world away from how most people invest in property – largely through buy-to-let, stocks or retail funds. Yet the fundamentals are the same: whatever happens when Britain leaves the EU and regardless of Mark Carney talking down the market, Britain will continue to be an attractive place to live and work.

Unemployment is at a four-decade low – largely thanks to the rise of the gig economy – with only 4% of those active in the labour market out of work during the three months to the end of June this year, according to the Office for National Statistics (ONS). Even Boris Johnson has found gainful employment at a national newspaper.

Safe as houses

Much of Britain’s wealth – and indeed the perceived wealth of citizens – is inherently tied to property. While there are certainly strong arguments to be made for freeing up the £7.14 trillion of equity tied up in UK housing and letting it flow down, with a chronic undersupply of housing, the investment opportunity remains strong provided the location and price are right.

While London has a booming collection of big tech HQs, the city has a greater level of diversity than smaller enclaves such as San Francisco. The capital’s variety of districts – supported by ongoing public transit investment – are being brought closer together, which is changing the face of the city. Crossrail will beat down commuter times and bring all kinds of new areas within an hour’s reach of the City.

A long-term view

For most people, property is a long-term play where investors who appreciate the illiquidity premium against bonds or equities and who understand the risks, can benefit through diversification and enhanced returns. Now, thanks to innovations in fintech – one thing the UK is now seen as a leader in – the bridging sector is finding new and innovative ways to deliver for its clients.

As part of a larger real estate group that includes established residential developer Fruition Properties and crowdfunding platform Propio.com, we have far more in-house experience underwriting deals and managing projects, which helps our team manage risk. We all accept that the short-term future can be far from certain. But the long-term fundamentals of Britain and our economy remain strong and investors in any asset classes face a period of volatility ahead.

 The crucial thing people need to consider is having a diversified portfolio that ensures they have a blend of safer assets and riskier plays that can drive up returns. Property development should only ever represent a minority slice, but with demand for mid-priced housing set to continue – largely thanks to Help to Buy and cheap mortgage finance – demand for housing is likely to outpace supply for some time, no matter what happens in Brussels.

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