On the 14th August The Office for National Statistics ( ONS ) issued its Statistical Bulletin regarding Overseas Travel and Tourism, detailing provisional results for June 2014. There were a number of key points the first being “Visits to the UK by overseas residents continue to rise and are up 8% year to date (January to June), with holiday visits up 12% in the same period. So why has this increase occurred and does it give us direction when considering to invest in property?
In the lead up to the London 2012 Olympics we saw a substantial number of people invest in UK property based on the impact of the UKbeing promoted on the world’s stage. So are these increases signs of the legacy of the Olympic Games? There have been a number of other high profile sports events recently held in the UK, including the 2014 Commonwealth Games held in Glasgow earlier this year. The Commonwealth Games Federation President Prince Imran has called the Glasgow Games “the best Games ever” .
In recent weeks there have been many news articles including pictures of the car park outside the Dorchester hotel populated with “ super cars “ including Ferraris Lamborghinis and Rolls Royces worth millions. This is indicative of the season known as the “Ramadan Rush” The weeks leading up to the Muslim month of fasting, which begins on July 20, have seen millionaires and billionaires flock to London from across the Middle East with numbers we believe increasing. It is reported that visitors from Saudi Arabia are up 22 per cent year-on-year, and UAE visitors have risen to almost 120,000 a potential rise of nearly 10%.
In recent years France has banned the Burka and so many that had previously holidayed in Paris can do so no more. There are also signs that the effects of the Arab Spring have encouraged many to look overseas for a potential long-term safe haven and the UK can potentially offer this. This particular group of investors however, when they invest in property, tend to focus in the more prestigious areas of London.These therefore have been a contributory factor in the price increases we have seen in this area of the property market. Shopping by the visitors is also at high levels and stores capitlise on this featuring staff and products who appeal to this area of the market.
‘The Ramadan Rush is a total phenomenon,’ says Jace Tyrrell of the New West End Company, the management company for retailers in Oxford Street, Bond Street and Regent Street.
The ONS bulletin highlights how this increased tourism affects the UK economy, “Over the last twelve months, estimates of earnings from overseas residents to the UK continue to rise and are up 7%.” There were 16.41 million trips to the UK made by tourists between January and June, an 8% rise on the same period in 2013 and during these visits it is estimated that £8.92bn has been spent by foreign residents. Taking the month of June 2014 in isolation spending by visitors to Britain increased by 4% , a new June record of £1.97bn which is positive given the 2013 year-end total exceeded £20bn for the first time.
“ It shows the government’s tourism strategy is working” Helen Grant Tourism minister
So should UK property investors consider investing in tourist related properties or in areas that benefit from the demand generators of tourism? Demand generators are key when looking to invest in property, be it residential, commercial or the popular student properties. They should form part of essential research before investment is made and not only the ones identified for the target audience of the property. Investment Property Consults are happy to assist in identifying these points for potential property investment.