No Comments

Gen-Y: The Future of the UK Property Market

Part 1 of our Manchester series underscores research highlighting Manchester as the UK’s no. 1 property investment hotspot in the next 10 years. In Part 2, we discuss why Manchester is poised to have the strongest rental market in the UK.


Video credit: Select Property Group

According to Savills, demand for rented accommodation has increased by 17,500 households per month over the past decade to 2014. This demand for rented homes is set to rise by more than 1 million households over the next 5 years.

The private rented sector in Manchester is slated to boom with over 10,000 new build-to-rent units are due to be built over the next few years. This is due largely to the Mancunian city’s largest concentration of young working adults, i.e. the Generation Y.

7 Reasons Why Generation Y is the Future of the UK’s Property Market – Select Property Group

  • They do not want to be tied down with long-term mortgages
  • Career-focused; they stay in roles for shorter lengths of time as they progress later in life
  • Prefer to live in dense, diverse urban villages
  • Demand ceaseless access to technology and fast-paced information
  • Professional and educated with a good work-life balance
  • Value practical amenities that make living easier
  • No expectation to own a property – success is defined in other ways

#DidYouKnow that Manchester is home to over 60% more 25- to 29-year-olds than the national average? (source: Manchester Property Guide 2015)

Manchester has the youngest working demographic in the whole of the UK.

Why is Manchester the Fasting Growing Generation Y City

  • The city’s population is rising quicker than any city outside of London and 2.85 million people will live there by 2025 – 89% of this new population is Generation Y.
  • It means over 60% more 25 to 29-year-olds live in Manchester than the UK average. This Generation Y market accounts for 22% of Manchester’s overall total population, almost 4 times the national average
  • A huge 85% of people living in Manchester city centre now privately rent and 70% of the population is classed as BINKY – Big Income, No Kids Yet
  • 58% of graduates from the Greater Manchester universities enter employment in the local area. That’s almost 20,000 new workers a year. Every year.
  • Aspirational and career-focused young people are naturally drawn 70,000 new jobs will be available to them over the next decade.
  • City targets state Manchester needs 4,000 new units a year to house its rapidly growing Generation Y market. Only 1,417 annual units are set for delivery over the next eight years. Two-thirds of this supply is still subject to planning.

This post is originally published by Select Property Group.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

No Comments

Manchester: Best Property Investment Yields

In Part 1 of our Manchester series, we discuss the facts & figures that make Manchester THE top city for investment in the UK. The numbers don’t lie.
Photo credit: Select Property Group

The investment landscape in the UK is changing. The focus has moved from London as the go-to destination for investment and the UK’s largest economic gains, to Manchester.

With the highest yields and critical undersupply of housing in the Northern Powerhouse on the back of significant investments by the government, Manchester’s growth is just beginning. Today, Manchester is at the top of the league in annual rental increases in the UK and, with a rapidly expanding population comprising greatly of the youngest demographics in the country, Manchester is the best place for property investment.

In fact, property advisor JLL has predicted that house prices in Manchester will increase by 26.4% in the next 5 years, with 5.5% growth over the course of 2016.

Trust the facts. Here are 10 reasons why you should invest in Manchester:

Manchester has secured £8.2 billion of investment over the past decade, more than Birmingham’s £6.5 billion or Glasgow’s £5.3 billion – CBRE, Jan 2016

2  HSBC ranked Manchester as the UK’s no. 1 city for property investment yields in 2015, thanks to average annual returns of 8% – HSBC, 2015

3  Since 2010, average annual yields in Manchester have risen by 6.02%, the highest in the UK. In comparison, yields in London rose by just 4.71% during this period

4  Manchester named as UK’s top property investment hotspot in the next decade – House Simple

5  Manchester is a young community, with over 60% more 25- to 29-year-olds living there than the national average. These people need rental accommodation – Manchester Property Guide 2015

6  Manchester has a higher job growth rate than London, recording a 47% increase job advertisements in April 2015 alone compared to 42% in London. 70,000 new jobs will be created by Greater Manchester’s financial and professional services sector by 2025 – CV Library & BNY Mellon

7  Manchester was named the best UK city to live in for the second consecutive year – EIU Global Liveability Survey 2015

8  Manchester’s population expected to grow by 125,000 to 2.87 million in the next decade – ONS

9  With the redevelopment of transport systems, more than 15 million people can reach the city in less than 45 minutes by 2025 – up from 7 million currently – BNY Mellon

10  Greater Manchester to get its own directly-elected mayor, with the region receiving £1 billion worth of devolved powers from the UK government. This will enable Manchester to hold new freedoms to better control its own budgets and will be able to dictate which areas need the most investment on a regional level.

In Part 2 of our Manchester series, we explore the influx of Generation Y in the city and how it contributes to greater demand for rental housing. Stay tuned!

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

No Comments

Brexit and the Foreign Property Investor

Photo credit: http://www.catholicherald.co.uk/

The looming Brexit referendum is sending property investors into a bit of a worry whirl. What are the implications?

Come June 23, UK citizens will vote on whether the nation should withdraw from the European Union. While there is still time before that happens, the uncertainty is a cause for concern across all industries in the UK. Here’s a Brexit FAQ specially for investors looking to invest in property in the UK.

What is Brexit?

Brexit refers to the campaign for a British Exit from the European Union, to end control by Brussels and give Britain the freedom to manage its own affairs. The referendum takes place on June 23. Currently, both factions are almost equally matched, with the pro-Europeans slightly ahead.

What are the general economic implications of the current lead-up to Brexit on the UK?

Clearly, the uncertainty has directly affected the market, resulting in, among others, (i) the drop of the British pound, (ii) the slide of share prices (iii) some major international investors withholding from committing to luxury property until after the referendum, (iv) some contracts exchanged on UK deals being conditional on a vote to remain, and (v) softening of business confidence.

What if UK exits the EU?

There is uncertainty over what would happen if the UK withdraws from the EU as Brexit is a future hypothetical event and largely lacks definition. In the short-term after the exit, we foresee a period of uncertainty as new terms of engagement with Europe are worked out. The UK economy may suffer in that short-term, but we are confident that it will right itself in time. The British pound will also weaken in the short term, but rise soon enough once the market acclimatizes to the situation.

How will UK and London’s global standing be impacted by Brexit?

The UK was a global economic superpower and London one of the world’s strongest financial centres even before it became part of the EU. We are confident the UK will eventually find its footing again should it exit the EU. Reports have also shown that investors are generally more positive about the longer term state of a UK out of Europe.

Will Brexit affect housing in the UK?

There is no serious economic analysis to suggest that all trade with the EU would cease in the event of Brexit. The most immediate and significant slowdown in investment would be pre- and potentially post-Brexit, due to uncertainty of the former and instability of the latter.

The value of the pound will likely diminish in the short term and there is risk of a sharp change in interest rates which could cause the housing market to soften. However, the UK is already facing a shortage in housing now, which won’t change in the event of a Brexit.

The possibility of dropping prices or a cheaper pound allows some investors to take advantage of less competitive processes as the property industry will bounce back in the long term, resulting in higher yields.  For foreign investors, a softer sterling means they can get more for their money, while the immediate instability in the market would mean the chance to invest in property that is highly likely to recover at a later date.

London’s housing market would be impacted significantly, but if you’ve always wanted to buy property in London, this is the time. As explained above, we are confident it will eventually find its footing again as London had always been a financial capital even before it entered the EU.

What if the UK remains in the Euro Zone?

The British pound will strengthen substantially as the market has priced in the uncertainty resulting from Brexit, which has resulted in the weaker currency in recent months.

Conclusion

The Brexit referendum has created a temporary situation of a weak pound which has paved the way for a tremendous buying opportunity for foreign investors compared to early 2015. The current exchange rate is at RM5.50 : £1 compared to RM6.80 : £1 as at late 2015. This is a one-time opportunity for foreign investors to take advantage of the situation.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

No Comments

The Silver Lining Behind Perth Property

Imagine owning a home just within walking distance from Cottlesloe Beach in Perth, Australia. It’s a buyers market now, and chances are, you can! Photo Credit: http://www.bosso.com.au/portfolio/cottlesloe-beach/

With property prices softened, buyers can now call the shots, purchasing real estate in some of the best suburbs at lowered prices. Strategic purchases will yield better returns and result in greater appreciation when the property market escalates.

The Perth property market has been on a decline over the last few years, but it may be that the market has bottomed out. Official figures released by the Australian Bureau of Statistics show that Perth’s residential property prices jumped 0.5% in the December quarter, ending the ongoing trend of sliding property prices recorded since late 2013.

That said, industry observers are remaining conservative, predicting a mild rise in prices (or for some, not at all) in 2016. Still, as they say, behind every cloud is a silver lining. It is now a buyers’ market in Perth and, coupled with low interest rates, a great time to shop for real estate. In time, when the market recovers, property is bound to see a corresponding rise in value.

What you COULD get with $A1million

So what can you get with A$1 million in West Australia today? Most likely an impressive 2-storey house near the city, acreage in the east or a beachfront cottage in the South West, reports the West Australian.

  • In Perth North – $999K buys a 4-bedroom, 2-storey house 10km from the city in Stirling.
  • In Perth South – $999K buys a 3-bedroom, 2-bathroom townhouse with a shared tennis court.
  • In Perth Southwest – $1 million could get you a beachfront property.
  • In Mosman Park – traditionally one of Perth’s most expensive suburbs – you could get a home for below $1 million.

What you SHOULD get with A$1 million

If you’re looking to take advantage of the market and get a better long term investment, a wise move would be to buy in sought-after suburbs that have seen a temporary softening in price instead of splurging on bigger and fancier homes.

There are predictions that older entry-level properties in suburbs like East Fremantle and Wembley Downs in the $550,000-plus range will see capital growth of up to 10% in the next 12-18 months.

“We are firm believers that location plays a big role in your investment. It makes logical sense to pay for a good location that has lots of potential for growth,” says CSI Prop spokesperson Virata Thaivasigamony.

“We like areas with infrastructural growth and job employment like Atwell, but we also see the potential in established locations like Cottlesloe, West Perth and Southwest Perth where capital appreciation is concerned. Of course, it is the buying motive will guide the purchase at the end of the day. The important thing is to speak to people who know the market, consult your own tax advisors, do your research,” he adds.

Are you watching the Perth suburbs? Here’s a list of bargain buy suburbs courtesy of Realestate.com.au:

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

No Comments

Australian Suburbs Blacklist 2016

Bangaroo, Sydney. Credit: Taken from http://bit.ly/1Ri9DWf

Summary:

·       AMP Bank has blacklisted 140 apartment suburbs across Australia due to oversupply and other issues

·       Queensland and Western Australia lead with most blacklisted suburbs

·       In Australian capital cities Sydney CBD and Melbourne CBD tops the blacklist for high rise builds

AMP BANK has blacklisted apartments in more than 140 suburbs due to growing concerns of oversupply, off-the-plan sales and falling prices. The list was leaked and published in the Australian Financial Review yesterday.

The concern of oversupply could push down prices, rents and lead to defaults. AMP is not the only big lender circulating black lists, where buyers will face tougher terms on the amount borrowed, number of apartments purchased in a single development and a ban on using some incentives offered by developers, such as rental guarantees. Last year, NAB had blacklisted more than 80 suburbs across Down Under where they capped LTVs in the area.

Currently, Queensland and Western Australia leads AMP’s blacklist, while among capital cities, Sydney tops both AMP and NAB’s ‘high risk’ list, as building of apartments has boomed due to demand from investors and first-time buyers. Melbourne is not spared either, namely the CBD, Docklands and Southbank.

What’s worth flagging is that Brisbane CBD, Melbourne CBD, Perth CBD, and Sydney CBD have appeared on both NAB’s blacklist in 2015 and AMP’s blacklist this year.

“We have been warning our clients that the CBD is not the place to invest in as valuations have been unfavourable. We have refrained from marketing Sydney property as prices have gone too high and there is a great oversupply there. AMP’s blacklist just confirms our predictions,” says CSI Prop spokesperson Virata Thaivasigamony.

“Our objective is to make a difference in the lives of our clients, to help them achieve their investment goals, which is why our projects are concentrated in locations that have sound growth potential. We pride ourselves on our research, which is the bedrock of the investment projects that we offer,” he adds.

An estimated 45,000 apartments are due for completion and settlement over the next nine months to Christmas in Melbourne, Sydney and Brisbane, an increase of nearly 25 per cent compared to last year, with another 53,000 coming to the market in the same postcodes next year, according to planning consultancy MacroPlan Dimasi.

Below: AMP’s Apartment Suburb Blacklist 2016

Credit: Australia Financial Review http://www.afr.com/real-estate/amp-blacklists-more-than-140-suburbs-for-apartment-lending-20160322-gno3em

To read more about AMP’s Apartment Blacklisted Suburbs 2016, click http://bit.ly/1RAp8Li

To compare with NAB’s credit risk list in 2015, read: http://bit.ly/1MDqT2P

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

No Comments

Melbourne Property: CBD or Fringe

Melbourne to overtake Sydney as largest city in 2053. Source: Australia Bureau of Statistics

MELBOURNE PROPERTY: CBD VS FRINGE

Among all the states in Australia, statistics show that Victoria will have the largest population in the future, driven by massive and rapid growth in Melbourne city (source: CBRE). The Australia Bureau of Statistics projects that Melbourne will overtake Sydney as Australia’s biggest city in 2053.

It’s easy to understand why – spurred by a highly diversified economy and world-class education and tourism, Melbourne has been named Most Liveable City five times consecutively since 2011.

Smart investors looking to net significant rental income from the growing population have been investing their money in various suburbs across this beautiful city.

The key question is, where is the best place to invest in Melbourne?

MELBOURNE CBD: SMART INVESTORS STAY AWAY

Melbourne CBD is an amazing place – organized, pretty, artistic and with amazing walkability scores – and we love it! From an investment point of view, however, property in the CBD is an absolute NO.

Here’s why:

  1. Valuation for property in the CBD has been 20%++ BELOW purchase price

In the CBD, housing projects are confined to high-rise development only, which usually takes about four to five years to complete. The team at CSI Prop has heard from many of those who had previously invested in CBD property, complaints that the banks had undervalued their property by 20% lower (or more) than purchase price. Statistics have shown that the average property price in Melbourne increases by 9.53% each year (source: Australia Property Monitors). This essentially means that the abovementioned properties in the CBD had not only been valuated BELOW its original purchase price, it had also depreciated! Speak to a licensed independent mortgage broker or lawyer for Australian property if you want verification.

  1. The last three years have seen NEGATIVE capital appreciation in CBD property (source: Australian Property Monitors).
  2. The CBD is approaching an oversupply of apartments. There is increasingly higher vacancies as more properties come to completion.

Melbourne CBD approvals for six months of 2015 was 12,516. Melbourne’s high-rise boom currently encompasses 33 towers under construction and a further 39 to be built, according to Skyscraper, Activity Monitor and UrbanMelbourne. Researcher BIS Shrapnel said, “The city is already heading for a glut of apartments. By June 2016, there will be a surplus of 15,000.”

  1. No Exit for the next 10 Years++

Last September, Australian website Domain.com published that investors should “get out as soon as possible (otherwise) it will take 10 to 15 years before you get your money back.” This is due to (i) the oversupply of apartments in the CBD and (ii) Australians generally dislike living in the CBD. In case you didn’t already know, foreigners are not allowed to purchase property in the secondary market. Which simply means that foreign investors looking to exit the market are only allowed to sell to Australians. But Australians don’t like living in the CBD…

 

CBD FRINGE PROPERTY – HIGH RETURNS, GREATER CAPITAL APPRECIATION

Research has shown that investing in property located at the CBD fringe is the most rewarding. We at CSI Prop are supporters of properties located in these locations, based on our own research which is backed by industry experts.

Property located in the CBD fringe are a top choice because:

  1. They are extremely accessible to the city by all kinds of transport including walking, yet removed enough from its hustle and bustle.
  2. Many are located close to areas with lots of green, F&B outlets, entertainment and the arts.
  3. Good appreciation value. If you invest in the right location, you should be able to own seven properties in 10 years, with an initial capital of only RM100,000. Ask us how.

We leave you with a chart of the top CBD-fringe suburbs to invest in:

Melbourne-Fringe-VS-CBD-csiprop
Comparative data of property located at Melbourne CBD-fringe

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

No Comments

Australian Property: Doomsayer’s Obsession

Economist Steve Keen at the summit of Mount Kosciuszko after losing a bet house prices would plummet 40 per cent. Photo: Andrew Meares. Credit: Domain website http://bit.ly/1T7b9MT

“…we can live without gold, we can even now live without oil, we can live without stocks and shares, we can live without just about everything now, but we can’t live without somewhere to live. There is this whole crowd of people who love to give the property market a hard time as if it is a bad boy for making people money.”

IN 2010, Steve Keen undertook a 224-kilometre walk from Canberra’s Parliament House to the Snowy Mountains’ Mount Kosciuszko wearing a T-shirt with the words, “I was hopelessly wrong on house prices. Ask me how.” The walk was the result of a lost wager – the economist had made a bet with Macquarie Bank analyst Rory Robertson that home prices would fall 40% from peak to trough in a year.

Contrary to Keen’s prediction, capital city house prices in Australia rose by 12.1%, hitting a new high, as demand from first-home buyers sparked a revival at the lower end of the market.

In 2014, American economist Henry Dent forecast a fall in house prices of at least 27% in Sydney and Melbourne over the next several years. Macroeconomic researcher Lindsay David followed suit with his prediction of a housing bloodbath in the same year.

UK-based economist Jonathan Tepper is the latest in a line of doomsayers touting the proverbial Australian housing bubble and the property market crash of between 30% and 50% in values.

“Australia now has the highest level of household debt to GDP in the entire world,” says Tepper, following his well-publicised research ‘expedition’ in Sydney’s Western suburbs.

It’s fascinating how his predictions are based on a rather unrepresentative sample of the entire Australia. Equally fascinating is the forbearance of Australian industry experts and how they have patiently swatted away predictions by doomsayers time and again.

AMP Capital chief economist Shane Oliver said: “In a way I think it is a bit of a joke, this sort of story has been wheeled out almost continuously now since 2002, 2003. We had a big run up in property prices then and it did become a bit bubbly around that time and of course various people were inclined to think that property could crash. Then as the years rolled on I began to realise and I think most people in Australia realised, that the Australian property market is a lot more complex and a lot more stable than people give it credit for and the reason prices don’t crash is because we don’t have an oversupply like America did at the time of the GFC.’’

Real estate expert Andrew Winter said commentators who expressed this kind of “drama” about the market were forgetting what the commodity was.

“This commodity is property, residential property, and that is where all the calculations fail. For the simple reason is we can live without gold, we can even now live without oil, we can live without stocks and shares, we can live without just about everything now, but we can’t live without somewhere to live. There is this whole crowd of people who love to give the property market a hard time as it if it is a bad boy for making people money.”

Truthfully, there is much to be considered in the life and times of the Australian property market – not just prices in Sydney and one or two suburbs in Melbourne.

Things are going well Down Under, overall: the RBA has highlighted lower unemployment, above-average business conditions and stronger business lending, noting expansion in the non-mining parts of the economy had strengthened during 2015. The facts speak for themselves; research has shown that the Australian population is slated to increase over the years with Melbourne leading the way.

CSI Prop spokesperson Virata Thaivasigamony chuckled at the recent prediction made by Tepper, joking that doomsaying helps make headlines and drive newspaper sales.

“Australia has one of the highest population growth trends, superseding a good number of developed countries in child birth rates. Its capital appreciation rates are unlike Singapore, Hong Kong and Malaysia – there are no steep fluctuations. The last 50 years have seen Australia’s appreciation rates on average rise at a steady 7% thereabouts, which I would attribute to population growth. And with population growth comes increase in demand for housing,” he said.

But as they say, there are two sides to a story, just like there is always more than one story. Ultimately, the decision lies in the hands of the buyer/investor. As always, we strongly advise investors to research the market: do some reading and/or call us for obligation-free consultation and advice so that you can make informed decisions. At Cornerstone International, we place great value on research and strive to offer viable investment projects backed by research.

For now, let us leave you with a darkly humorous parting shot: predicting when the property bubble will pop is bad for your mental health, according to the Sydney Morning Herald J

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

No Comments

UK Student Property in 2016

Phase II of London Spring Place which launches in Kuala Lumpur end of February. Phase 1 sold out within the year of launch!

UK student property is the strongest investment platform today, surpassing other traditional real estate classes. In 2015, the UK student property sector saw investments to the tune of £6 billion – twice the amount invested in the sector in 2013 and 2014 combined. Experts say the sector is likely to see more investment in the years ahead.

UK Student Property

Formerly reserved for institutional investors, UK student property has become one of the most popular investment vehicles to date in the world of property investment. From a mere £500 million in 2010, direct investments in the sector reached £6 billion in 2015, surpassing the £3 billion in 2013 and 2014 combined. More significantly, this marks an increase of more than 300% over the £1.7 billion invested in 2014 alone.

Is Growth in the Sector Set to Continue?

The answer is yes.

The fact remains that there is still an acute under supply of purpose built student accommodation (PBSA) in the UK due to restrictions in building permissions, a challenging planning environment and the government’s support for housing development. Meanwhile, the number of foreign students continues to rise due to recently abolished restrictions in foreign student numbers, which comprise the traditional mix of new first year students and second- and third-year returners.

To illustrate, the number of foreign students at Britain’s top universities doubled between the 2005/2006 and 2013/2014 academic years. These students tend to come from wealthy families who are able to afford the soaring cost of tuition for non-European Union residents and demand a high-class standard of living. The Higher Education Statistics Agency reported that the number of residents living in private halls more than doubled between 2007 and 2014—from 46,000 to 102,000—a trend predicted to continue. The dramatic upswing has been fuelled by the inability of university-managed accommodation to keep pace with student numbers.

London’s full time student population alone is expected to rise by 50% in the next 10 years, whilst student cities, particularly where there is a Russell Group university, is expected to see dramatic increases in student numbers. EU and non-EU students are the fastest growing segment, bringing a net benefit of £2.3 billion per annum to London’s economy supporting 60,000 jobs in the capital.

But, beyond the fundamentally undersupplied market, one reason for the success of PBSAs is that students have become more discerning, especially in light of increased tuition fees. Unite Group reports that 85 per cent of second year undergraduates are now looking for quality, purpose-built student homes that fulfill all their needs (including peace and quiet and access to night life), and with the CBRE statistics showing that student accommodation generally has occupancy rates of some 99%, it’s easy to see why people put their money into this area of the market.

Conclusion

The structural undersupply in purpose built UK student property has caused prices to skyrocket. Student housing charity Unipol, for example, reported a rent rise of 25% in purpose-built student accommodation between 2010 and 2013 – nearly double the rise in the rental sector as a whole in that period (13%).

Experts predict that student housing will experience a continued strong demand but with significant supply side challenges in London and key student towns. With this demand from students for more luxurious space, coupled with rising student numbers and strained supply, there is certainly potential for all sorts of investors to get top marks for their shareholders and earn strong income and profits from the sector.

Global investment into UK student housing. Source & credit: Savills Research file:///C:/Users/Marketing/Downloads/spotlight–uk-student-housing-2015.pdf

Ultimately it’s not just about what you invest in; it’s also where you invest in. In a recent report in the Property Wire, several student cities were highlighted as the next investment hotspot including Manchester, Liverpool, Birmingham and Brighton. Looking ahead, it is also likely that London will continue to be an attractive city for students from across the UK and around the world. However, there is the risk that prospective students will be put off by the cost of living in the capital (house prices have risen by 46% and private sector rents by 19% over the last five years according to the ONS).

‘So long as demand outstrips supply, upward pressure on both rents and capital values will continue to make the market an attractive proposition for investors, and we don’t expect the market to come off the boil for some time,’ says CBRE head of student housing advisory Jo Winchester.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

No Comments

The Malaysian Investor & UK’s New Buy-to-Let Policies

Good news for Buy-to-let Investors

British housing prices have risen sharply in the last two years, thanks to record low interest rates, an under supply of property (vs. demand), and a strong employment market. Thus, annual rental returns are attractive, which bodes well for the buy-to-let investor.

There are nearly 2 million private landlords in Britain, owning almost 20% of homes, and the positive environment has only added to the appeal of buy-to-let property, also known as rental property.

However, the government is taking steps to cool the market in a bid to protect the interests of potential first-home buyers by introducing new tax rates on buy-to-let property. In a budget statement in November last year, Chancellor George Osborne announced that buy-to-let investors will have to pay a 3 percentage point higher rate of stamp duty than residential buyers due effective from April this year. Meanwhile, come 2017, landlords’ abilities to deduct mortgage interest from rental income before working out a tax liability, will be phased away. All this on top of a predicted rise in Bank rates.

Some doomsayers are anticipating an extreme downturn in the property market, suggesting that investors purchasing mortgaged rental properties today are set to lose money within 5 years. There are also suggestions that potential buyers could turn into sellers, flooding the market with additional supply and slamming the growth of the rental property sector into reverse.

What do these measures mean for the Malaysian Investor?

It appears that the new cooling measures will mainly affect UK residents, as the presumptions are that UK landlords fall within the 40%++ tax bracket.

Foreign investors, i.e. Malaysian investors do not earn salaries in the UK, which means they naturally fall within the lowest tax bracket to begin with, i.e 20% tax for income below £31,865 p.a. Additionally, Malaysian investors have an extra £10,000 as an annual tax-free exemption on rental income. This means that the Malaysian investor will hit the 40% tax bracket and therefore start experiencing some differences only upon earning £41,865 p.a. in rental income.

Assuming a nett yield (after deduction of all expenses) of 4% for rental properties, the Malaysian investor would need to own investment properties worth more than £1,000,000 before he/she hits the 40% bracket. Currently, as most London properties are only raking in 1% – 2% yield, the reality is that you would need to have £2,000,000 to £4,000,000 worth of properties before you hit the 40% tax bracket.

In other words, you won’t feel the pinch unless you are ultra-rich

Meanwhile, the removal of mortgage interest in tax deduction will affect investors buying rental properties in their personal names. In order to get around that, more individuals are resorting to buying rental property under a company structure.

Under the new measure, landlords will not be able to deduct mortgage interest from their rental income before it is assessed for tax but will instead get a flat-rate 20% tax credit. This means those paying higher-rate tax will lose half of their relief, while some others will be moved up into this bracket and so see their tax bill soar.

As such, using a company structure means interest, which is classed as a business expense, can still be deducted. Corporation tax would also apply which would reduce a higher-rate taxpayer’s rate from 40% to 20%.

(Remember, unless you own properties worth £2,000,000 – £4,000,000, you would be hard-pressed to hit the 40% income tax bracket. Mostly, Malaysian investors are within the 20% bracket which means the removal of mortgage interest in tax deduction will not apply, as they automatically get a 20% tax credit under the law. Again, only the ultra-rich are affected).

Student Property Investors

Student property investors are not affected as mortgages are typically not offered for that investment type.

According to CSI Prop spokesperson Virata Thaivasigamony, these latest measures are part of a populist stance as Britain gears up for the elections.

“The biggest domestic issue is the affordability of housing in the UK and how it has affected first-time house buyers. Landlords, especially foreign landlords, are blamed for the hike in house prices. These housing measures seem like a political move,” says Virata, adding that heavier restrictions would have been imposed on the investor if the market were headed for a collapse.

“In the Autumn Statement, George Osborne also announced a 40% interest-free help-to-buy loan for first-time house buyers. This shows that he isn’t really trying to cool down a market that is on the verge of a crash, rather, it gives mileage to his political cause by appealing to the interests of new British home buyers.

“If you look at the fundamentals, it is clear that the UK has a shortage of housing due to low levels of construction since the recession in 2008. This has choked housing supply, causing house prices to inflate. And while building of homes is picking up now, it takes time before that translates into sufficient homes.

“Overall, UK house prices won’t crash. The government will certainly be taking more measures like Singapore, Hong Kong and Malaysia to slow down the market to orchestrate a soft landing because if the markets crash, everyone is affected.”

What about the London property market, specifically?

“London has always been deemed as the international safe haven, which is why foreigners tend to diversify their wealth in London. Because of that, it’s hard for property in London to crash either. The prices have gone up steadily in the recent past, but I foresee a plateau (in prices) and, in the meantime, areas like East London — previously previously seen as undesirable — will experience major construction and subsequent price growth due to gentrification,” Virata adds.

“Ultimately, life goes on. Look at Australia: it got hit with 3% stamp duties last year, which hasn’t really slowed down the foreign purchaser. But it certainly has made the locals feel good that their government is doing something for them…”

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

No Comments

UK Property Outlook 2016

UK property outlook 2016. London at sunset. Credit: wikipedia

Summary:

  • Overall positive outlook across the UK, but central London growth subdued.
  • Growth in the Northern cities due to governmental initiative and overall affordability amid high growth
  • Student property remains a good investment option given structural under-supply

The year started on a bleak note, no thanks to the current global economic climate. On the property front, the beginning of 2016 in the UK was headlined by policies to be imposed by the Chancellor on home-owners and landlords,such as future tax and stamp duty increases, and the abolition of mortgage income relief in 2017 – all this on top of predictions of a rise in Bank Rates, prompting doomsayers to predict an extreme downturn in the property market with projections stretching to 2021.

Read how the rates increase affects the Malaysian investor here

But, let’s not get ahead of ourselves. Forecasts are essential in helping the investor strategize, but it is crucial to take a closer look and weigh the predictions against the facts and what we already know:

Raising taxes and other rates are usually measures used by the government to protect the welfare of its house-buying citizens by preventing skyrocketing property prices and overarching speculation resulting from uncontrolled property-buying by wealthy local and foreign investors. The CGT in Singapore and Hong Kong and the RPGT in Malaysia, as well as FIRB taxes and stamp duty hike in Australia are a good example. We’re not saying you should ignore it; we’re just saying it’s not a deal-breaker.

To illustrate, a survey by the Council of Mortgage Lenders found that despite the negative outlook, landlords are confident that they will be able to absorb the impact of tax changes while over 80% are confident they won’t have to raise rents in order to cope.

As for all that talk on Bank Rate increases: the trend for pushing forward forecasts for the rate rise into the future has been going on since rates were cut in 2009; the prediction keeps getting pushed back in the end.

Currently, Bank Rates stand at 0.5%; the prediction for a rise was set for Dec 2016 or Jan 2017 following the first rate rise in the US in 9 years, last December. But with the global economic gloom of 2016 and comments of the Monetary Policy Committee (MPC) along with dramatic market movements, money markets imply that the first increase is poised for Aug 2019. Bank of England chief economist Andy Haldane said last year that the case for UK raising interest rates was “some way from being made” and that negative rates may still be needed.


CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260