The rise of remote property investment is one of the more notable by-products of the altered post-pandemic housing market. While this trend has the potential to radically adjust how the UK property market functions on an enduring basis, it is still, in many senses, flying under the radar.
Indeed, the pandemic may well have underscored the urgency of more flexible ways to invest in property, as circumstantial necessity propelled this emerging trend forward. It is well known that the property market was one of the few beneficiaries throughout this unprecedented period of turmoil.
For one, the lockdown-induced lifestyle changes prompted homebuyers to re-evaluate what they wanted from their properties, while many investors sought refuge in the ‘safe haven’ status of UK property amid market fluctuations.
“With key milestones to a sale, such as hosting buyers to view a prospective purchase and signing witnessed contracts made functionally illegal, the sector had to be agile to facilitate the demand at hand”
However, it is often forgotten that channelling this surge of new demand was a problem in itself. For vast periods of the early pandemic era, social distancing restrictions and multiple lockdowns conspired to effectively outlaw the way estate agents have traditionally worked. With key milestones to a sale, such as hosting buyers to view a prospective purchase and signing witnessed contracts made functionally illegal, the sector had to be agile to facilitate the demand at hand.
This led to a remarkable – and quite successful – rapid digitalisation of the real estate market. Agents rose to the challenge to adapt their tools and skillset to a remote environment, where distance became part of their new normal. For their part, buyers demonstrated a willingness to go against the conventional and commit to the right property without necessarily having to see it for themselves.
Homes were sold based on 3D renderings, online real estate video walk-throughs and relationships were forged over FaceTime and Zoom as more and more Britons got comfortable with buying a home remotely.
Of course, once any industry taps into a more efficient way to channel its resources, it is difficult to imagine reverting. Even as the pandemic recedes into memory, remote property investing looks here to stay.
Facilitating international capital flows
Unlike traditional property investment, remote property investing offers investors the freedom to invest anywhere in the world from the comfort of their home, therefore bypassing the geographical and time constraints.
This will no doubt change the rules of the game for overseas investors, with the UK property market particularly well placed to embrace the trend, rather than lean away from it, given its long-standing global reputation as a safe investment vehicle, which is likely to stand out amid the global economic turmoil.
Indeed, ownership of UK property from overseas investors has risen 180% in the last 12 years. While much of this growth was front-loaded to the beginning of the 2010s, the underlying factors are largely unchanged.
Further, Prime Central London property’s undisputable allure as a prestige asset among overseas high and ultra-high net worth investors is likely to remain strong, with the capital expected to outperform other prime cities over the next year, according to estimates from Knight Frank.
Land Registry data released last year highlighted the key players in investment in UK property today – and revealed much about the future sources of capital flows. Singapore and Hong Kong in particular stand out. These countries are notable for their volume of high and ultra-high net worth individuals, and an increasingly international outlook.
From this we can assume that the prestige of UK property remains strong enough to harbour increasing levels of remote investors from further afield. Desire to invest in brick and mortar here is not restricted to those with a personal history or knowledge of the market, nor those with close geographic and transport access.
Instead, investors from distant corners of the globe are looking to increase their holdings in the UK’s property market, with the weaker pound likely to further fuel their interest. The sector’s enhanced ability to facilitate this demand will produce a greater breadth of avenues for this investment to reach the UK. Even a decade ago, securing remote investment from HNWIs overseas was largely under the remit of specialist agents. Now, an increasing number of agencies are prepared to engage with buyers from a distance.
How will finance be affected?
It is important to note that remote property investment carries some added risks to the buyer, which lenders will naturally need to factor into their considerations.
Buyers and investors’ dependence on their chosen property and financial partners will increase when investing remotely, as they will expect all relevant stakeholders to be their agents on the ground and to bridge the geographical gap with their expertise and increased customer attention.
Lenders’ ability to react with speed, and show flexibility and proactivity will become of paramount importance, as they will play a key role in helping to iron out the added challenges and enabling the successful completion of the transaction at a distance.
As such, they must also invest in upskilling their teams to ensure they stay ahead of the curve and that they are harnessing the potential of digital advancements to provide better service to their customers, as their needs grow in complexity.
Industry knowledge and expertise will come at a greater premium when it comes to remote investing and thorough due diligence and open communication will be critical for both parties to ensure that risks are minimised as buyers and investors prepare to navigate an increasingly complex real estate landscape.
