Wealthy investors from around the world continue to focus on the UK and seek smart (and sometimes innovative) ways to invest into the country’s economy.
In spite of a challenging 2020, in which the UK’s economic output dropped by almost 10% in the face of Covid-19’s impact, the country’s projected growth forecast for 2021 is looking more upbeat than was previously expected. According to the International Monetary Fund, the UK economy should grow by 7%, in line with fast-growing economies such as the US. The Bank of England is expecting growth of 7.25%, which is good news in light of the 9.9% contraction in 2020.
In short, while the UK is still feeling the effects of the pandemic, as well as the fallout from Brexit, the fundamentals remain strong and the economy is supported by government spending.
These are some of the more popular options for serious investors:
1. Bricks and mortar
According to Scott Irving, General Manager at Carrick Property the UK is still the top market for high-net-worth African-based investors, followed by the US and Portugal. It is also the market which appeals the most to European investors and those from the Middle East and India, and it is the second choice for investors from Asia, Australasia and North America. “Overall, the UK is still the best buy-to-let property market in the world in terms of popularity, and that’s great for clients because there is a very, very high demand,” says Irving, noting that a strong domestic market is also fuelling capital growth.
During the recent launch of One West Point, a 54-level residential tower in West London, Irving explained that a strong investment case underpinned the UK property investment opportunities which Carrick Property can offer clients.
“London has remained quite flat for the past four years from a property growth perspective, but in spite of the financial crisis and Brexit, over a seven- to 10-year period London continues to go up,” said Irving. He added that if investors bought well and held over the medium- to long-term in London they would see excellent returns.
Of course, investing in the UK property market is not just a London game. Cities like Birmingham, Leeds, Liverpool and Manchester are all benefiting from urban regeneration programmes and offering attractive returns.
2. Investin companies listed in the UK
For other investors a more direct path into UK investment holds greater appeal, for instance through buying stocks on the world’s seventh-largest bourse, the London Stock Exchange (LSE). There are no restrictions on non-UK residents investing in the UK, although it is important to consider the tax implications in both the UK and your country of residence. While it is possible to buy blue chip stocks directly, an increasingly popular avenue is through exchange traded funds (ETFs) as well as managed funds. The LSE has around 1200 ETFs listed on its main market.
3. Explore UK-based international pensions
“If you worked or lived in the UK for any amount of time, let’s say five years or plus, and during that time you contributed to a UK-based pension then perhaps you should get in contact,” says Anthony Palmer, Carrick Group Commercial Director, who explains that “tracking down that pension and establishing its value or simply more proactively managing an existing pension that you are fully aware of could have huge benefits to you and your wealth strategy.”
4. Explore Premium Bonds
Premium Bonds, one of those delightful UK oddities, will not keep pace with inflation and will not guarantee your returns but these lottery bonds are an unusual toe-in-the-water way to dabble in UK investing. Issued by National Savings and Investment, holders are automatically entered into a monthly prize draw to win anything between £25 and £1 million tax free. It is possible for foreigners to buy and hold Premium Bonds, they just need a personal UK bank or building society account, but it is important to check that restrictions and tax requirements in your country of residence permit you to hold Premium Bonds.
First introduced in the UK in 1956, as a way of encouraging saving, today about 21 million people in the UK have Premium Bonds. If nothing else, it’s novel.
5. Put on your wings
For investors with a higher appetite for risk, another option is to consider investing directly into emerging UK firms or start-ups, for instance by exploring angel investing options around the country. A variety of bodies and associations exist in the country which engage with individuals and organisations focused on angel and early-stage investment in the UK, and which offer a range of information and insights.