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Foreign investors look to real estate to drive UK growth

Words: Huw Morris

The proportion of foreign investors who see real estate and construction as a key driver of future growth in the UK has more than trebled since last year.

Analysis by global professional services network EY of the UK’s attractiveness as a destination for foreign direct investment reveals that 31 per cent of respondents said real estate and construction would drive future UK growth, up from 10 per cent in 2019.

This places real estate and construction third among the most attractive sectors for overseas investment – behind digital with 50 per cent and health and wellbeing with 36 per cent.

“The government stated infrastructure plans have likely played a role in boosting interest in the real estate and construction sector,” said Russell Gardner, EY UK & Ireland’s head of real estate, hospitality and construction.

“But the significant impact of the pandemic on UK high streets and workplaces has also encouraged many investors to reimagine what real estate will need to offer in the future.”

The Covid-19 pandemic has influenced investors’ strategies, with 61 per cent saying the changing model of major city centres will become an important theme in future investments. Nearly a quarter of respondents cite the reliability and coverage of infrastructure as a crucial factor for deciding whether or not to invest in a particular country – underlining the built environment’s importance to attracting foreign investment.

“There will be opportunities to attract investment as the country rethinks the roles and make-up of our towns and cities,” Gardner added. “The long-awaited National Infrastructure Strategy is expected to provide a clear, long-term framework, and will be an essential catalyst to attracting investors who are willing to make significant, long-term commitments.”

Across all sectors, the analysis found the proportion of overseas companies planning to invest in the UK in the next 12 months has fallen to 25 per cent from a 10-year high of 31 per cent in April.

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