With a third of the global population on lockdown, the world continues to adjust to life in 2020 alongside the coronavirus pandemic. Measures to ensure health services have the capacity to cope with Covid-19 has put the economy on a stand-still. While, most investors are thinking about the now, it’s important to start thinking now about longer-term opportunities to maximise returns once restrictions begin to ease.
The UK remains an attractive proposition for property investment with low interest rates, good value against the pound, and capital appreciation expected to rise as we emerge out of the crisis. Below, we outline why the UK property market is a safe bet for investors.
0.1% interest rates
Prior to the UK government enforcing lockdown restrictions, the Bank of England cut interest rates to 0.1%. This represented the lowest level to date and aimed to mitigate longer term economic problems as a result of the Covid-19 outbreak.
We would expect interest rates to remain low as we emerge out of the current crisis, as a tactic for jumpstarting economic recovery and encouraging people to borrow. This in turn will drive an increase in housing demand, which means conditions are good for property investors and those that seize this opportunity will reap the rewards as the economy improves.
The pound remains weak
After hitting another low against the euro and dollar in March, there were signs of the British Pound recovering. However, the ongoing situation globally has meant that the pound remains weak, with exchange rates sitting at 1.14 (GBP/EUR rate) and 1.24 (GBP/USD rate) as of Friday (17 April).
With no sign of any considerable growth for the foreseeable future, foreign investors should be encouraged to invest in the UK while they can get more for their money and will yield better returns when the pound eventually recovers.
Capital appreciation to increase post-crisis
Key to any investment is return on investment and this is something as a company we strive to achieve for our investors. As we emerge out of the pandemic, we would also expect capital appreciation to increase, so those that are continuing to invest will see solid returns.
These claims are not unsubstantiated; we have experience in securing capital growth in the wake of a global crisis. For example, our Olympic Apartments development in Stratford achieved a 37% capital growth (Q1 2010 – Q1 2012) in the wake of the 2008 financial crash. This shows that while things remain uncertain, there is certainly opportunities for investors.
GRE Assets are experts in property investment and regeneration in the UK and Spain.