By Virata Gamany, Executive Director of CSI PROP
With Malaysia’s savviest investors increasingly looking beyond their borders for lucrative opportunities, the property market in the United Kingdom (UK) has emerged as a top area of interest. Its reputation for long-term stability and strong potential for attractive returns continue to attract those seeking to diversify their investment portfolios.
Indeed, the UK property market offers Malaysian investors a unique blend of affordability, strong rental yields, and long-term capital appreciation—all factors that make it a prime destination for diversifying wealth.
By understanding economic trends, investment hotspots, and key strategies, investors can unlock the full potential of the UK property sector towards their advantage.
Here are 10 reasons why Malaysian investors should invest in the UK:
#1: Strength of the Ringgit against the Pound Sterling
One of the most immediate reasons to consider the UK property market is the favourable currency environment.
The pound sterling (GBP) is weaker than it has been in years, particularly against major currencies like the US and Singapore dollar. The stronger Ringgit in recent times also works towards creating an unprecedented opportunity for Malaysian investors. Essentially, it’s as if UK properties are "on sale" when viewed through the lens of currency exchange, allowing investors to secure high-value assets at a discount.
#2: Malaysia’s oversupply against the UK’s undersupply
While Malaysia faces a chronic oversupply of residential properties (an overhang of nearly 1.9 million units¹), the UK is grappling with an undersupply of almost 4 million homes². This has caused property prices to continue rising steadily, regardless of political events like Brexit or economic slowdowns. The demand for housing in the UK remains robust, presenting a valuable opportunity for investors. This consistent demand ensures a solid foundation for those seeking stable and gradually appreciating returns on their investments.
#3: Understanding inflation and interest
Inflation and interest rates are constantly managed in a delicate balancing act by the UK government. As inflation increases, the UK government typically responds by raising interest rates, which subsequently makes borrowing more costly. This often causes potential buyers to hold back, reducing demand and temporarily softening property prices.
As inflation stabilises, the government tends to lower interest rates, reducing the cost of borrowing for investors. When interest rates drop, properties cost less, leading to increased demand as more buyers enter the market. By understanding these cyclical trends, investors can strategically time their entry and capitalise on appreciating property values as demand rises.
The beauty of the UK market is that its chronic undersupply of housing ensures that even during periods of high interest rates, prices remain stable as the need for housing persists. Rental yields also tend to rise significantly during these times, giving landlords the upper hand. As rates decrease, investors benefit from both strong rental income and capital appreciation, positioning UK property as a dual-benefit investment.
#4: Seek proven investment hotspots
Malaysian investors seeking the most lucrative opportunities in the UK would do well to look out for investment hotspots that are ripe for the picking. Manchester is one prime example that stands out as a property goldmine. With the fastest population growth in the UK, Manchester has grown due to student immigration and internal job migration. The city is now at the epicentre of the Northern Powerhouse, a government initiative to stimulate economic growth in the North of England.
The city’s affordability is another major draw. Property prices in Manchester are a fraction of those in London, yet rental yields remain strong. The average property in London’s Zone 1 can cost £1 million, while in Manchester’s city centre, prices hover around £300,000. This disparity makes Manchester a far more attractive option for investors looking for strong returns on investment.
Meanwhile, over the last decade, Manchester has seen capital growth of over 83%, compared to stagnating growth rates in London. The combination of lower entry costs and higher returns makes it a highly attractive destination for investors.
#5: Focus vs Diversification
Many investors I’ve spoken to assume diversification involves spreading their assets across different markets. However, true diversification is not about holding small stakes across numerous ventures, but rather understanding where the real opportunities lie and focusing on them.
In my experience, Malaysian investors often hold over 90% of their wealth in local assets, leaving only a small portion for international investments. The reality is that Malaysia’s property market is oversaturated, and growth potential is limited. By focusing on the UK market, particularly high-growth cities like Manchester, investors can maximise their returns.
My personal journey in property investment has proven that focusing on what consistently works—rather than diversifying for mere "security"—is the most effective strategy. The UK's enduring appeal, robust regulatory framework, and constant demand present a safer and more lucrative opportunity compared to an already saturated Malaysian market.
#6: Look for loopholes and opportunities
When it comes to investing in UK properties, there are several strategic loopholes or financial "hacks" that Malaysians can leverage to maximise their returns. One such example is that in the UK, age is not a restrictive factor in securing mortgages, allowing investors to borrow up to the age of 97. Additionally, mortgage terms in the UK can extend up to 30 years and may also be structured as interest-only loans.
#7: S.A.F.E.T.Y. First
Every investment carries risks, and property is no exception. One of the key ways CSI PROP manages risk is by adhering to the S.A.F.E.T.Y First framework, which includes only partnering with developers that have a proven track record. The UK’s property system is designed to protect buyers. Unlike in Malaysia, where progressive payments during construction can expose buyers to greater risks, UK developers must secure most of the project funding themselves before commencing construction. In the worst-case scenario, your exposure is typically limited to your initial deposit, thanks to strong contractual protections in place for buyers.
#8: Unlock your hidden “warchest”
Many investors are unaware of their own untapped assets, or a "warchest," that could be leveraged for property investment. Investors can use equity from their properties, for instance, or use stocks and bonds to refinance and fund additional purchases. These methods allow investors to grow their investment portfolio without needing additional cash upfront.
Another wealth building strategy is refinancing. By holding onto properties for 5-7 years and refinancing them as they appreciate in value, investors could use the released capital to purchase new assets without selling their existing ones. This "buy and hold" method makes real estate investment an easy choice for investors to sleep well at night without worrying about the volatility of market swings.
#9: Explore “Wealth Lending”
Investors who convert Malaysian Ringgit to British Pounds face the potential for unfavourable exchange rates to impact their returns. However, a convenient way around this risk is through “Wealth Lending”, a credit facility offered by banks that enables investors to borrow against their existing assets like stocks, bonds, and unit trusts.
#10: A treasure chest of free education worth thousands of Ringgit
CSI PROP offers free educational workshops designed to help each investor unlock their underutilised assets and provides them with valuable tools and strategies for responsible asset management. CSI PROP offers access to hundreds of hours of free content,from live webinars and one-on-one consultations to physical events. These enable investors to conveniently enjoy learning about investing in UK properties online. There will also be upcoming events such as the "10 Hackathons" series that will even dive deep into revolutionary investment strategies, empowering investors with insider knowledge.
All in all, the UK property market, particularly in high-growth cities like Manchester, presents Malaysian investors with a rare chance to diversify their portfolios and secure stable, lucrative returns.
As always, doing your due diligence is crucial, and so is partnering with experts who know the market inside out. At CSI PROP, we’re dedicated to guiding investors through every step of the process. From property management and financing strategies to tax planning, legal support, and ongoing market insights, we ensure that you are well-informed, supported, and equipped to make strategic decisions for years to come.
For more information, visit CSIPROP.COM.
References
¹ “1.9 million residential units unoccupied nationwide”, The Sun, 13 Oct 2023
² “The housebuilding crisis: The UK’s 4 million missing homes”, Centre For Cities, 22 February 2023
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.
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