The United Kingdom (UK) stands to be the sixth largest economy in the world. It is not only home to the world's largest financial center alongside New York but, London is one of the largest cities in the world with the highest city gross domestic product (GDP) in Europe. This makes the UK a major financial hub for international investors.
Even though investment in the UK may be low-risk compared to other emerging markets, there are still some risk factors that a potential investor should take into account.
Some benefits of investing in the UK include:
London has one of the world's fastest and most advanced financial markets next to New York, which makes the financial and securities market highly stable for investors looking for opportunities outside of their region.
Although slightly sluggish and the population getting denser by the day (which is a big plus for real estate investors), the UK Economy is nonetheless among the most stable in the world, being home to the biggest stock markets and an unmatched scope for investment.
However, some risks to investing in the UK include:
The economy of the UK is comprised of over 70% services and businesses providing so, which is common among developed countries. While this may mean more stability, changes in consumer credit and commodity prices may cause problems.
Britain threatened to quit the European Union in 2016, which exposed the economy to a high level of political risk. Scotland has made similar threats to no longer be a part of the United Kingdom. These kinds of political feuds could lead to economic volatility.
The UK is one of the world's oldest and largest financial hubs, being home to some of the biggest companies operating within its economy. These factors make it an attractive investment destination for international stakeholders.
Investors can invest in the UK using a variety of different methods, ranging from easy-to-use ETFs and ADRs to more complex direct investment in the London Stock Exchange, to property and real estate.
In the next 20 years, the number of UK households is anticipated to reach 28 million - an increase of around 250K households per annum. Single person households would rise by a further 3.2 million – accounting for 20% of all households - putting forth an even greater demand on available housing stocks.
The UK is now more crowded than any other major economy in the European Union. With around 410 people per square kilometre, the population density is four times that of France and will be double that of Germany in the next 20 years.
The latest Government calculations suggest that around 232,000 new properties need to be built in England every year just to keep pace with the rising population and to avoid the demand-supply problem. However, the number of new homes being built is now at a decline since the early 20th century.
Since 2002, the demand for rental property has almost doubled. Currently, Rental properties account for 11% of the total housing stocks, which is great news for new and experienced investors altogether.