Britain’s mega-wealthy look to cash in on uncertainty in property market

Britain’s mega-wealthy have been ramping up investment in commercial and residential properties, as they look to cash in on the uncertainty in the market according to a new report.

According to a new study by Investec, shared exclusively with City A.M., some 77 per cent of corporate executives, and financial hotshots making more than £510k a year have been looking to increase their exposure to UK property investment. 

Respondents said on average they will invest an additional £380k. Around one in ten said they are planning to increase their exposure to the sector by £500k or more. 

Investec said this trend is “mirrored by a confidence in borrowing against other assets.”

Around 58 per cent said they have borrowed against an investment portfolio, with 21 per cent of those people borrowing £250k or more.

“Typically these loans are taken out to reinvest into the portfolio or to assist family members with buying property,” the firm said.

It comes amid a challenging period for the UK’s property market, as high interest rates and the cost of living crisis have impacted demand. 

The commercial property market is also suffering from the post-pandemic shift to home working and away from high street retail.

Cheryl Quinn, private banking team lead at Investec, told City A.M. many view the current instability as an opportunity for increasing their exposure to UK property at an “attractive price point.”

She said: “Despite uncertainty around house prices, as a business we are seeing that a large number of high net worth individuals remain optimistic about the sector.”

“Many view the current instability as an opportunity for increasing their exposure to UK property at an attractive price point and very much value the ability to leverage income in order to fund investment properties.”

She added: “However, these individuals can struggle to access lending because of their complex income profiles. 

“This is particularly true of City professionals, who often receive a large part of their remuneration as discretionary income, and entrepreneurs, who usually have a large part of their wealth tied up in their businesses.”