Why Global Investors Are Ditching US & Flocking to UK Property

The U.S. property market has long been a favourite in global real estate, seen as stable and lucrative. No longer: foreign investors are pulling out of U.S. homes in droves at the fastest rate in more than a decade. Sky-high home prices and a strong dollar (until recently) have sent them scrambling for safer shores. And they’re increasingly setting their sights on the U.K.

According to the National Association of Realtors, purchases of existing homes by non-U.S. citizens collapsed to a 15-year low in the 12 months through March 2024 to 54,300, down 36% from a year earlier (and that was before Trump was elected president). Total foreign investment sagged 21%, to $42 billion. The median-home-price paid by foreigners hit a record $475,000.

But it’s not just real estate taking the heat. Global investors are yanking money out of U.S. stocks, too. Bank of America’s latest survey found a net 36% of fund managers are now underweight on U.S. equities (meaning they’re holding less U.S. stock than normal) as they funnel their money into other markets, the biggest retreat in nearly two years.

The trend is only expected to strengthen. Because of a brutal combo of mounting political uncertainty in the U.S., trade-war prospects and the fading allure of the dollar. All of these are forcing investors to rethink where to stash wealth in an increasingly unpredictable world. The capital flight also reflects worries over a recession sparked by aggressive trade policies.

The Trump Factor

Investors hate uncertainty, and right now, Washington is serving up plenty of it.

On 2 April, President Donald Trump slapped aggressive new tariffs on foreign goods, sparking fears of an all-out global trade war. Markets panicked, but just 12 hours later Trump hit pause on most of the measures for 90 days (barring China), citing ongoing negotiations. Stocks bounced back but the damage was done: investors got a reminder that U.S. trade policy can flip on a dime.

Three big worries linger:

• Tariffs on Chinese goods rocketed to 125% in response to Beijing’s own countermeasures, which has retaliated with 125% on the U.S. goods and vowed to "fight to the end".
• Trump’s broader 10% universal tariff (and 25% on cars) stayed in place, pushing U.S. tariffs to their highest level in nearly a century.
• The 90-day pause isn’t a cancellation, meaning harsher tariffs could return at any moment.

The Dollar’s Decline

Another factor driving the exodus from the U.S. market is the dollar’s weakening outlook. A recent survey found that 61% of investors expect the greenback to depreciate in the next year, the gloomiest forecast since 2006.

Laura Kane, Chief Investment Officer at UBS Global Wealth Management, says: “If you’re a European or Asian investor holding U.S. assets, a falling dollar means your gains get wiped out by exchange rates”.

No surprise, then, that wealth managers like Canaccord, RBC Wealth, and Schroders Cazenove report a spike in clients shifting assets offshore -- some moving half their wealth out of the U.S.

Some are going even further, locking money into trusts designed to be untouchable by any single government. As James Blosse-Lynch of Rathbones puts it: “This is their getaway money”.

It’s Just Getting Started

While Europe battles with economic stagnation and Asia faces unpredictable regulations, the UK property market is becoming a safe haven for global capital, and American buyers are leading the charge.

From Hollywood celebrities snapping up multimillion-pound mansions in London to institutional investors betting on regional cities like Manchester and Birmingham, the UK is enjoying an unexpected resurgence. Yet it’s still one of the most underpriced markets in Europe. And there are real financial incentives steering the trend.

1. The Pound’s Discount

The British pound has been weak for years, and for U.S. investors, that’s a gift. Compared with a decade ago, UK real estate is 30-40% cheaper for dollar-based buyers. (Where else can you buy prime London real estate at 2014 prices?) Think of it as a double win: if the pound recovers, investors benefit from both currency gains and property appreciation.

2. Government Perks

The UK recently scrapped its “non-dom” tax regime, but it replaced it with something just as enticing. Individuals who return to the UK after being non-resident for at least 10 consecutive tax years can benefit from UK tax relief on any foreign income and gains earned during their first four years back in the UK.

For wealthy Americans, those wary of rising U.S. capital gains taxes, this makes the UK an ideal mid-term wealth preservation hub.

Moreover, unlike many countries, the UK doesn’t penalise foreign buyers. In fact, recent tweaks to stamp duty and incentives for regeneration zones (like freeports and tax breaks for developers) are making it even more attractive. And unlike FIRPTA-style taxes in the U.S, the UK doesn’t slap extra taxes on foreign real estate investors.

3. Stability in a Chaotic World

The U.S. feels politically volatile right now. Between trade wars, mid-term election uncertainty and changing tax policies, many investors are looking for safer harbours. Scotland and England have some of the most stable lease laws in the world, giving property owners more security.

The UK, despite its own troubles, provides:

• A predictable legal system (unlike the patchwork of state laws in the U.S.)
• Strong property rights (no risk of sudden asset seizures)
• A deep, liquid market (easy to buy and sell, notably in London)

A Swiss private banker jokes: "The UK isn’t sexy, but it’s reliable—like a Volvo".

Where the Smart Money Is Going

From luxury London townhouses to student flats in Manchester, here’s where the big money is going—and how you can follow it.

1. Prime Central London

Forget the doom-and-gloom headlines, super-prime London (£15m+ homes) is booming, notably among wealthy Americans. In 2024 alone, U.S. buyers made up 25% of sales in this elite segment.

Why?

• The weak pound makes London property a relative bargain for dollar-backed buyers.
• Long-term prestige -- Mayfair, Belgravia and Kensington never go out of style.
• Luxury rents are soaring (up 34% in some areas), making buy-to-let a cash cow.

Recent mega-deals:

• Tom Ford’s £80m Chelsea townhouse
• A £139m Regent’s Park estate (one of the biggest sales ever)

If you’re parking eight or nine-figure wealth, London’s luxury market is still the ultimate "safe deposit box".

2. Where Americans Are Snapping Up Leases

With U.S. mortgage rates sky-high, many wealthy Americans are renting instead of buying in the UK, yanking up demand in prime areas.

Hotspots:

• Notting Hill, Bayswater, Knightsbridge – Rents up 34% since 2022
• Long-term leases (2-3 years) are common, giving landlords stable income

Who’s renting?

• Finance professionals (hedge fund managers, bankers)
• Tech workers (relocating from Silicon Valley)

If you’re buying to let, focus on furnished, high-end rentals, which attract deep-pocketed expats.

3. The Rise of Manchester, Birmingham & Leeds

London isn’t the only game in town. Regional cities are exploding thanks to:

• Government incentives (brownfield redevelopment grants, relaxed planning rules)
• Cheaper entry prices than London
• Strong yields (up to 7.5% in some areas)

Where to Buy:

• Manchester – 7.5% yields in some areas, driven by young professionals & tech boom (MediaCityUK, BBC)
• Birmingham – HS2 (eventually) + massive regeneration = long-term upside
• Leeds – Fast-growing fintech hub, cheaper than London

Avoid overpriced new builds -- older, well-located flats usually produce better yields.

4. Retail Property

Remember when everyone said UK retail was dead? Turns out, reports of its demise were greatly exaggerated.

Why Retail Is Back:

• Vacancy rates falling as discount chains, gyms, and co-working spaces move in
• Yields of 6-8%, rare in today’s low-return market

Best bets:

• Shopping centres in university towns (student demand = steady foot traffic)
• Converted retail spaces (e.g., warehouses turned into co-working hubs)

5. Scotland (the Undervalued Gem)

While London grabs headlines, Glasgow & Edinburgh are delivering stellar returns.

Why Scotland?

• Homes sell 30% faster than UK average (Edinburgh)
• 5-7% rental yields (Glasgow)
• Lower entry costs than London

Richard Donnell of Zoopla says Scotland is where England was 10 years ago -- undervalued, high-demand and packed with upside.

Bonus: No leasehold nonsense, everything’s freehold (simpler, fewer fees).

US vs UK Property: Which Wins in 2025?

Conclusion

For decades, investors from all over the world poured into U.S. real estate, drawn by its perceived stability and strong returns. But times change, and lately, they’ve changed fast. Now, eyes are turning elsewhere. And increasingly, they’re landing in the U.K.

True, it has its quirks (hello, leaseholds and stamp duties), but it also has something most markets lack right now: predictability.

How UK Property Accountants Helps You Make Smart Decisions

At our firm, we focus on helping international investors cut through the noise and invest with confidence in the U.K. Here’s what we bring to the table.

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