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Perth Property Prices to Increase in Jan 2019

These next two months will be the last for foreign investors to make substantial savings on Perth property purchases. Come Jan 2019, Western Australia will join the rest of the country in imposing a stamp duty surcharge on foreign property buyers in the state.

 

Earlier this year, the Western Australia (WA) government announced that foreign buyers of residential property in the state will have to pay a stamp duty surcharge of 7%. WA is the last state in the country to impose a stamp duty surcharge on foreign property buyers.

The tax will be in force from 1st Jan 2019, and brings WA into line with the rest of Australia in imposing a foreign purchaser duty surcharge. This surcharge is now imposed by the six Australian states and the ACT at varying rates and scope.

Current additional stamp duty rates for foreign buyers in the Australian states.

Australian citizens, Permanent Residents and special category visa holders do not need to pay this tax.

Corporations and trusts are not exempted as long as foreign interests in the entity exceed 50%.

Residential developments with 10 or more lots are excluded from the tax.

Cost breakdown of a WA property valued at A$500,000

Industry players like the Real Estate Institute of Western Australia (REIWA) have opposed the tax. Its outgoing President, Hayden Groves said the tax will cause an upward pressure on rental prices.

A turn for the better

Perth’s median house price for September was at $505,000, 1% lower compared to last year YOY. Comparatively, 3 years ago the median house price was declining at a more significant pace, recording a 4.2% decline between September 2015 and September 2014.

Although prices in Perth remain soft, the decline of house prices has slowed, which is good news and an indicator that prices are starting to bottom out. Improved affordability in the Perth housing market presents investors with an excellent opportunity to get in before the additional stamp duty kicks in on Jan 1st, 2019 and prices start to rise again.

Incoming REIWA president Damian Collins said that in this quarter leasing activity was up, median rents remained stable, stock levels had reduced, average leasing times were quicker and the vacancy rate had plummeted to its lowest level in more than four years.

Perth’s vacancy rate declined to 3.9% during the September 2018 quarter – the lowest level Perth has experienced since the March 2014 quarter.

Located on Murray Str, in the heart of Perth city, NV is within 1 minute reach of top designer brands (King’s Str) and a vibrant F&B & lifestyle area (Shafto Ln). NV boasts top notch lifestyle amenities and is a trophy property in this growing city. NV will be envy of all. INVEST NOW BEFORE STAMP DUTY INCREASE OF 7% ON 1 JAN 2019.

Mr Collins said, “With all key market indicators improving during the September quarter, Perth’s vacancy rate has now fallen below the 10 year average.

“The rental sector is really leading the charge in the Perth property market recovery. The September 2018 quarter results are very encouraging and should provide landlords and investors with a lot of confidence.”

Interested in to get into the Perth property market before the 7% tax kicks in? One of the latest developments in the city’s prime CBD (central business district), NV Apartments, has a superb location with a whole host of luxurious amenities, from just A$313,000. Act quickly and give us a call at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com.

By Ian Choong
Edited by Vivienne Pal

Sources:

  • https://reiwa.com.au/about-us/news/perth-rental-market-has-strong-september-quarter/
  • http://www.ironfish.com.au/blog/2018/06/06/foreign-investors-consider-western-australia/
  • https://reiwa.com.au/about-us/news/foreign-buyer-surcharge-sends-wrong-message-to-vital-skilled-migrants/
  • Featured image: Nomads Hostels

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Perth Set to be the Next Melbourne

Perth is set to be the next Melbourne, a new report from Infrastructure Australia indicates. After a stagnant 2017, Corelogic predicts that house prices in the inner city will rise by 3.3% this year and 4.1% in 2019. With prices at an affordable rate, property situated in choice locations are ripe for the picking and investors stand a chance to reap returns from the growth of the property market in the future. 

Currently Perth is Australia’s fourth largest city by population. By 2046 it is forecast to leapfrog Brisbane into third place, with 4.3 million people — the current population of Melbourne. And if the Government’s recent proposal to restrict immigration to Sydney and Melbourne goes through, the city’s eventual population may exceed even that figure.

Australians traditionally are resistant to the idea of living in apartments, and this is more so for those living in Perth. Just 6.6% of the city’s residents live in apartments, half the national average of 13.1%. This will change as numbers increase — as a large-scale city grows, it expands not just outwards but upwards as well.

The Perth suburban sprawl stretches along the Western coastline for about 150km, making it almost nine times as large as Singapore, but with just over a third of its population. As the population grows to a similar scale as Melbourne, apartment living will become more widespread.

The 2016 Australian Census showed that there is one occupied apartment for every five (1:5) occupied separate houses in Australia; compared with one to every seven (1:7) 25 years ago. Apartments are also getting taller. Twenty years ago, about 20% of apartments were in blocks at least four storeys high, with the proportion now closer to 40%.

Over the past decade, the number of apartments in the Perth council area alone has increased by about 150%. Perth has seen changes in planning that recognises this, and state and local governments are encouraging strategic placing of mixed-developments where they benefit the most, close to existing good transport, infrastructure and in high-amenity locations.

One example of these developments is NV, a new off-plan apartment within Perth’s central business district (CBD), benefitting from the completion of the Perth City Link.

Perth City Link is a major urban renewal and redevelopment project to the tune of over A$5 billion, playing a central role in regenerating Perth’s entertainment, cultural, shopping and infrastructure links. Rail and bus links have been completed, connecting the city centre with the Northbridge entertainment precinct. Currently, further development is ongoing on a mix of retail, tourist, office and residential accommodation.

Corelogic looked at changes in the property market across Australia over the last 25 years, and found that prices in Perth grew at an annual 6.7% for houses and 6% for apartment units since 1993 — making it the third best property market after Sydney and Melbourne.

Located on Murray Str, in the heart of Perth city, NV is within 1 minute reach of top designer brands (King’s Str) and a vibrant F&B & lifestyle area (Shafto Ln). NV boasts top notch lifestyle amenities and is a trophy property in this growing city. NV will be envy of all. INVEST NOW BEFORE STAMP DUTY INCREASE OF 7% ON 1 JAN 2019.

Following the nation’s property downturn, prices have slipped by more than 10% across the city since mid-2014, although some areas have managed to be relatively unscathed. The outlook for the next two years is that improvement in the economy and population growth will stabilise the Perth real estate market. After a stagnant 2017, Corelogic predicts that house prices in the inner city will rise by 3.3% this year and 4.1% in 2019.

RED ALERT: Perth will be imposing additional stamp duty for foreign investors in January, which is an extra 7% on the property price. Investors looking to buy property can avoid the hike by signing contracts before Jan 1st, 2019.

Interested in to get into the Perth property market before the 7% tax kicks in? One of the latest developments in the city’s prime CBD, NV Apartments, has a superb location with a whole host of luxurious amenities, from just A$313,000. Act quickly and give us a call at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com.

By Ian Choong
Edited by Vivienne Pal 

Sources:
  • https://thewest.com.au/lifestyle/real-estate/perth-destined-to-become-the-next-melbourne-ng-b88972063z
  • https://thewest.com.au/business/housing-market/perth-property-market-suffers-worst-fall-as-inner-city-and-south-west-suburbs-tipped-for-revival-ng-b88962488z
  • http://www.abc.net.au/news/2018-01-16/perth-apartment-development-debate-suburban-sprawl/9324992
  • https://www.perthnow.com.au/news/wa/new-figures-show-more-perth-residents-living-in-apartments-ng-8f60dd3e490dbac3aa5329aa42e51184
  • https://cdn.mra.wa.gov.au/production/documents-media/documents/central-perth/perth-city-link/file/perth-city-link-fact-sheet.pdf
  • https://www.mediastatements.wa.gov.au/Pages/McGowan/2018/08/$158-million-development-approved-for-Perth-City-Link.aspx
  • https://www.finance.wa.gov.au/cms/uploadedFiles/_State_Revenue/Duties/Duties_Circular_17-Foreign_Buyer_Duty.pdf
  • Featured image: State Library & TripAdvisor

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6,000,000 Elderly Brits Will Require Care Homes by 2040

A recent report warned that, by 2040, the British elderly population in need of care will hit a critical 6 million.

The report was commissioned by the Department of Health and Social Care, and carried out by the London School of Economics, and York and Kent ­universities.

Britain’s elderly population is growing rapidly. In 25 years, the report projected that the number of those over 65 years of age will increase from 9.7 million to 14.9 million, a rise of more than half.

Those over 85 years of age are projected to rise even more rapidly, more than doubling from 1.3 million to 2.7 million.

Of the elderly population, those in need of care will shoot up to 5.9 million, an increase of almost 70% from the previous 3.5 million.

Growth of the UK’s elderly population and those in need of care by 2040. Source: ESHCRU, PSSRU

Report lead Raphael ­Wittenberg of the London School of Economics said: “Our projections of demand for social care show unless there is a substantial decline in disability rates in old age, the number of people needing care will rise greatly over the next 25 years.”

Public expenditure on social services is expected to balloon from £7.2 billion to £18.7 billion, which is more than two and a half times the amount spent in 2015.

The £9.4 billion in dedicated social care funding provided by the Department of Health and Social Care to local authorities over a three-year period, has been insufficient for the growing elderly population in need of care. Budget cuts have hit social care aid, and NHS figures showed those receiving help have fallen by 400,000 since 2010.

Barbara Keeley, Shadow Minister for Social Care said: “Councils who provide care are facing bankruptcy, nearly half a million fewer people are getting publicly funded care than in 2010 and over one million older people are going without any care at all.”

Ian Hudspeth, chairman of the Local Government Association’s Community Wellbeing Board said: “With people living longer, increases in costs and decreases in funding, adult social care is at breaking point.

“Adult social care services face a £3.5 billion funding gap by 2025 just to maintain existing standards of care. The likely consequences are more and more people being unable to get quality and reliable care and support,” he said.

The elderly that do not qualify for social care funding will have to pay out of their own pocket. Private expenditure is projected to rise from £6.3 billion in 2015 to £16.5 billion in 2040, an increase of 163%.

Yet, private care may not be that easy to obtain either. In May, CBRE reported that by 2021, there would be a shortfall of more than 148,000 beds at private care homes.

Currently, 85% of Britain’s care home stock is over 40 years old with half of the existing 480,000 care home beds not fit for purpose and 6,600 care homes at risk of closure over the next five years, due to poor condition.

For the elderly in need of care but are unable to obtain it, there is undue pressure on their family and friends to provide assistance for daily living. This is not sustainable — the fate of Britain’s elderly lies in whether the country can build enough care homes to ensure them a decent standard of living.

New-build care homes are currently being constructed across the country to meet this need. With low supply and high demand, this sector offers  lucrative opportunities for investors, providing high returns at low risk.

Care homes from several developers like Qualia and Carlauren are packaged to be accessible to investors. There is no need for a large amount of capital, with investors being able to purchase as little as just an individual room, which has the additional benefit of falling below the stamp duty threshold for commercial property. This brings great returns due to the savings on duty.

An investment in care homes goes beyond monetary gain, and provides a practical benefit for society — specifically the British elderly population in need of care.

Virata Thaivasigamony of CSI Properties knows this. He says: “What the elderly care homes investment extends to the investor — above other investments — is the fulfilment of having done something for the good of others. Yes, it is undoubtedly a profitable venture, but it is also an investment that adds value to society and truly makes a difference.”

This weekend in Singapore at the Hilton Hotel (Thailand & Singapore Room Level 5), attend the launch of Bayview, a UK care home in Morecambe Bay. Meet Carlauren CEO Sean Murray and find out how you can get 10% rental returns assured for 10 years, starting from a capital of £85,950! 

What are your thoughts about the elderly care crisis the UK is facing? Drop us a comment below. If you are interested to invest in UK Care Homes with the potential for high returns while making a difference, don’t hesitate to give us a call at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

By Ian Choong
Edited by Vivienne Pal

Sources:

  • http://eprints.lse.ac.uk/88376/1/Wittenberg_Adult%20Social%20Care_Published.pdf
  • https://www.mirror.co.uk/news/uk-news/elderly-care-timebomb-report-reveals-13256671
  • https://www.nursingtimes.net/news/number-of-older-people-needing-care-set-to-rise-to-12-million-by-2040/7026017.article
  • https://csiprop.com/uk-care-homes-vs-malaysian-property/
  • Featured Image: Orchid Care
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Avoiding UK’s New Foreigner Stamp Duty Surcharge

Stamp duty for foreign buyers could be increased by up to 3%, UK Prime Minister Theresa May announced last weekend at the Conservative party’s conference in Birmingham.

The new increase in stamp duty, to be paid by individuals and companies not paying tax in the UK, will be rolled out after a consultation.

The new levy, once effective, is in addition to the stamp duty surcharge introduced in April 2016 on second homes.

UK STAMP DUTY FOR INDIVIDUALS OWNING MULTIPLE HOUSES

The latest levy, once implemented, is next on a list of measures taken by the government on the property market which includes the latest introduced in 2016.

Amid criticism that the Government’s efforts to tackle the housing crisis has been a flop, Mrs May’s latest measure intends to bring down property prices for British residents by deterring foreign buyers.

Mrs May said on the BBC that her party is “very concerned about the impact that foreign buyers have on the housing market and the impact they have on people who are living here and trying to get into the housing market. The evidence is that foreign buyers coming in pushes house prices up and lowers home ownership here.”

Best Time to Invest

However, the move could be counterproductive, as reduced foreign investment could set back house-building efforts. Builders sell off-plan property in order to seek better financing terms, and the lack of foreign cash injections could slow down projects in the pipeline.

Virata Thaivasigamony, CSIPROP’s Director of Research  feels that this would be a stopgap measure with potentially no real long term solution for housing supply in the UK.

“Price growth is influenced by supply and demand. There is already a glaring shortage of housing in the UK, which is a driving factor in house price inflation. Existing homeowners are facing challenges in downsizing or upgrading their homes, while millenials are unable to afford their own homes, hence the need for buy-to-let property.

“This new measure could be good in the short term for local buyers. However, foreign property investors have helped increase the supply of housing in the UK, and deterring foreign investment will have a knock-on effect on housing supply,” he said.

Trevor Abrahmsohn of estate agents Glentree International says, “whilst it is a laudable aim to raise a few hundred million pounds for homeless people, at this critical time for the country, when you want to encourage inward investment why stick up a notice to foreign investors saying ‘we’re closed for your business’?”

Adam Challis, head of residential research at property agents JLL, said: “It’s another small change but if it is read by investors as a signal of something broader, it’s quite possible that it will have a material effect on supply.”

Recent research has indicated that England has a severe backlog of 4 million homes. The Government will need to build 340,000 homes per year until 2031 in order to address the backlog. Current building efforts have fallen short — in 2016/17 only 217,350 homes were built and the government’s current pledge to build 300,000 homes annually by the mid-2020s, will not fully address the shortfall. 

Thus, any slowdown in housebuilding could further push property prices, having the opposite effect of what Mrs May intends.

“If you’ve been sitting on the fence about investing in UK property, now is your best chance before the surcharge gets implemented. We are talking substantial savings,” Virata advised, adding that he foresees increased investment activity in the near future as foreign buyers attempt to beat the surcharge increase.

The increased duty will raise £40m to £170m a year, against the existing £9.5bn for residential property. Mrs May said this would be spent helping rough sleepers, whose numbers have been rising.

In August the government launched a £100m drive to eradicate rough sleeping in England by 2027.

If you’ve been sitting on the fence about investing in UK property, don’t hesitate any longer. Learn more about the savings that you get from buying before the stamp duty surcharge: give us a call at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

By Ian Choong
Edits & additions by Vivienne Pal

Sources:

 

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A Guide to the Australia Property Purchase Cycle

You’ve decided to invest in Australia property but have no idea what the purchase process entails. This article will guide you through some of the stages in the investment process.

It starts with choosing a property that fits your budget and investment goals, and appointing an agency that can take you through the purchase process — unless you prefer the hassle of flying to and from Australia and dealing with the developer/seller directly! It is important that your agent works closely with the developers, facilitating communication from the developer to you, and vice versa.

1. Property Reservation

 

The beginning of your property purchase

At CSI Prop, we recommend investments based on your goals and budget. Once you have decided on the property for investment, you will need to sign Reservation Forms and a Solicitor Appointment Letter.

There are several payments required at this stage:

  • Reservation Deposit*: MYR5000 (forms part of the purchase price and is non-refundable)
  • Legal Fees*: approx A$2000

*Payment can vary depending on project/developer/solicitor

CSI Prop works closely with a panel of solicitors and mortgage brokers who are recognised in Australia. We’re happy to recommend our panel, but you also may use solicitors or mortgage brokers of your own choosing.

 

2. Exchange of Contracts & 1st Payment

Subsequently, you will sign the Contract of Sale for the property, and make your first payment to the developer.  For apartments, this is 10% of the property price. For a land and house package, the first payment will be 10% of the land price and 5% of the building price.

You will also need to make an application with the Foreign Investment Review Board (FIRB). This process is required of non-resident foreigners before purchasing any residential property in Australia. The cost for this (as of 2018-19) is A$5,600 for dwellings valued at A$1 million or less.

 

3. Financing

Application for financing can be done 3 to 6 months before settlement, and the banks will assess your financing position and eligibility.

Documents typically required by the bank include:

  • 3 to 6 months salary slips
  • 3 to 6 months bank statements
  • Income Tax Return Form

There are typically no application and processing fees to finance your property. However, the bank legal fees can incur up to 1.5% of the value of your property. There are several banks in Malaysia and internationally that offer financing, please get in touch with us to find out more.

 

4. Final Settlement & Stamp Duties

Once your property achieves completion, the developer will send a Completion Notice to your solicitors. You will need to make full payment for the property at this stage, which is also known as the final settlement.

At this point, you will also need to pay stamp duty, also known as land transfer duty, to the State Government. Stamp duties differ in amount across the different states of Australia, and the following rates covered here are applicable to residential property only. Different rates may apply to commercial property.

 

Victoria (Melbourne)

The following stamp duty rates apply in the state of Victoria for property that is not the buyer’s principal place of residence:

Stamp duty for Victoria (Source: State Revenue Office Victoria)

Foreign property buyers pay an additional 7% duty on top of these normal rates (stamp duty surcharge), unless exemptions apply. There are exemptions for Australian-based corporations or trusts which add to the supply of housing stock in Victoria.

In Victoria, Australian citizens, permanent residents or New Zealand citizens with a special category visa have the following exemptions:

  • First-time buyers pay no stamp duty on a property that costs below A$600,000, or a reduced rate if the property has a value of between A$600,000 and A$750,000.
  • Pensioners don’t have to pay stamp duty on a property that costs below A$330,000. They also get a partial concession on properties valued up to a maximum of A$750,000.

 

Western Australia (Perth)

These are the stamp duty rates for property in Western Australia:

Stamp duty for Western Australia (Source: Department of Finance, WA)

Foreign property buyers pay an additional stamp duty surcharge of 7% in Western Australia starting 1 January 2019.

 

Australian Capital Territory (Canberra)

These are the stamp duty rates in Australian Capital Territory:

Stamp duty for the Australian Capital Territory (Source: ACT Revenue Office)

Foreign property buyers pay an additional stamp duty surcharge of 0.75% in the ACT.

 

New South Wales (Sydney)

These are the stamp duty rates for property in New South Wales:

Stamp duty for New South Wales (Source: Revenue NSW)

Foreign property buyers pay an additional stamp duty surcharge of 8% in New South Wales.

 

Queensland (Brisbane)

These are the stamp duty rates for property in Queensland:

Stamp duty for Queensland (Source: Queensland Government)

Foreign property buyers pay an additional stamp duty surcharge of 7% in Queensland.

 

5. Property Management

When you exchanged contracts with the developer you may have signed an agreement to hire a letting agent. You may also have chosen to manage the property yourself.

The  letting agent will ensure your property  is well-maintained, taking care of all expenses involved, and collecting the rental on your behalf.

 

6. Rental Income

When you receive your rental income, you will need to pay income tax to the Australian Government. Different income tax rates apply for Australian residents and non-residents.

You may also be taxed again on your Australia income by the country where you’re resident in.

Malaysians do not need to pay taxes on rental income from Australia, to the Malaysian Government due to the double taxation agreement that both countries have. If you live in another country, you will need to find out if there is such an agreement between your country and Australia.

Income Tax for Non-residents in Australia

Income Tax for Non-residents in Australia (Source: Australian Taxation Office)

Taxes need to be filed yearly.  You can file your taxes yourself, or hire a tax agency to do it for you. CSI Prop can recommend a qualified professional in Australia to manage your taxes.

Note that if you own a residential property in Victoria that remains unoccupied, you may be liable for Vacant Residential Property Tax (VRPT). The tax was introduced as a measure to increase available rental properties, and is at a rate of 1% of the Capital Improved Value (CIV).

 

7. Property Resale/ Exit

Should you choose to sell off your property, we can recommend a property agent and solicitor to assist you.

The agent’s commission rates, your advertising budget, and exclusivity will be decided by you and the agent. The agent will provide an appraisal of the property indicating how much they expect to sell the property for, and tell you how they plan to market your property.  Agents fees vary according to state.

Legal fees generally range between A$700 and A$1300.

Take note that, unlike stocks, property is not a liquid asset, and you should always expect that it will take some time for the property to be sold.

Capital Gains Tax (CGT)

In Australia, capital gains are treated the same as income from other sources. Any net capital gain from the sale of a property is included as part of the seller’s income and taxed together with their other income. Capital losses can be offset against capital gains. Residents qualify for a 50% Capital Gains Tax discount, as long as they have held the asset for at least 12 months before disposal.

Click here for more guides on property investment, and please subscribe to our website notifications to get the latest updates! Leave us a comment below if you have any thoughts or questions on our article.

If you are interested to explore investing in Australian property for high returns, or if you need us to refer you to a good tax firm in Australia, don’t hesitate to give us a call at (65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

Disclaimer: This guide is an outline of CSI Prop’s purchase process, which may differ from other consultancies. 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. You should also seek advice based on your particular circumstances from independent advisors and planners.

By Ian Choong
Edited by Vivienne Pal

Sources:

https://www.sro.vic.gov.au/node/1485

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Investors Pay Homage to the King of Fruits

On a recent cloudy Saturday afternoon, CSI Prop hosted yet another exciting and fun Investor Club event, honouring the King of Fruits and the pride of all Malaysians: a Durian Party in recognition of the favourite season of the year!

The party, held at DurianBB Park KL, was a smashing success. The place was packed with investors and their family members who arrived in excited anticipation of the durian spread. As the theme suggests, this day was all about indulging in durian and its greatness.

On the menu were sweet, pulpy, mouth-watering varieties of durians and delicacies made out of durian such as pies and tarts. Other tropical fruits like mangosteens, nangka and rambutans were also served alongside multi-flavoured ice-creams and fresh coconut juice.  

Different types of durian served for the investors and their families

The party kick started with a free flow of durian to every table where investors, alongside their family and friends, relished in the variety of durians, ranging from the mildest-tasting to the rich and creamy Musang King.  

Ever the affable host, CSI Prop Director, Virata Thaivasigamony fleeted from table to table to greet and chat with guests. He then gave his welcome speech,  where he shared about his own investment journey and some informative insights on the UK property and investment market.

Bonding through durian party

Sam Lee of Capricorn Financial Consultancy and our guest speaker from the UK, spoke about the current state of the mortgage market, the various financing terms available and the lending criteria for property investment in the UK.

Sam Lee during his sharing

Switching gears, we had a short and sweet session on how to pick and sample durians according to its intensity of taste, courtesy of DurianBB Park’s Stella Heong. For example, did you know that the Musang King is the strongest-tasting durian and should be eaten last? Neither did we. Stella also shared that  durian and mangosteen, being the ‘fruit couple’, should always be eaten together so that the heat from the durian can be neutralized by the juicy mangosteen.

What’s a party without games? Investors were invited to participate in a durian-tasting game and stand a chance to bring home a free durian. Our investor, Mr Alex Goh, was the winner, guessing correctly in just a matter of minutes!

Are they able to guess the durian?

The durian party was clearly a hit, judging by how quickly more than 200kg of durian were consumed (on top of other fruits and pastries!) and the gleeful smiles on the faces of our guests. The evening closed with our guests receiving a goodie bag of durian snacks.  

Missed out on the last Investor Club event? Stay tuned for our next one in Q4 and wait for your invitation via email!

The CSI Prop Investor Club is open to all clients of CSI Prop. It is a platform for knowledge, fun and networking and is a realisation of our core values of Knowledge, Service and Having Fun. 

By Lydia Devadas Michael
Additions and edits by Vivienne Pal

 

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Investors Can Look Forward to UK Rents Increase of 15%

UK rents are expected to increase by 15% over the next 5 years, according to research by the Royal Institution of Chartered Surveyors (RICS).

The survey observed that smaller landlords were quitting the buy-to-let sector, affecting supply. “A reduced pipeline of supply will gradually feed through to higher rents,” RICS Chief Economist Simon Rubinsohn said.

Meanwhile, the supply of rental property in the UK continues to fall. In 2017, buy-to-let properties were sold at a rate of only 3,800 a month, leading to the first drop in the number of homes available to rent in 18 years, according to the latest report from the Ministry of Housing. 

In total, the number of privately rented homes in England fell by 46,000 last year — the largest reduction since 1988.

Buy-to-let properties decreased drastically last year. Source: Thisismoney.co.uk, Ministry of Housing, Communities and Local Government

The drop is attributed to the UK Government’s recent tax measures which, among others, increased stamp duty and reduced landlord relief claims against mortgage interest. The stamp duty changes have made it more expensive to purchase a buy-to-let property, and tax relief is set to drop further yearly until the 2020-21 tax year. 

These changes have made it less profitable for UK landlords, especially those on a mortgage, to rent out their properties. House prices have also grown faster than rents, prompting many landlords to exit the sector. Trade association UK Finance highlighted a 19% fall in new mortgages approved for buy-to-let homes in the UK.

Demand continues to rise, and rents are expected to spiral over the next few years. This points the way towards the purpose-built rental sector as a replacement for the traditional buy-to-let properties, which are often older houses on the outskirts of city centres, geared toward owner-occupiers.

Still, rental properties located in prime city centre locations remain attractive to young working professionals who are unable to purchase their own homes. These rental properties are set to rise in the face of dwindling buy-to-lets.

Developing cities in the UK regions like Manchester, Birmingham and Liverpool are growing quickly, and properties in the city centre offer access to business opportunities, employment, and entertainment demanded by a modern working lifestyle.

While interest rates remain low, investors looking towards the UK can thus take advantage of the shortage in supply for rental properties, investing in prime locations in developing cities where the demand is the highest.

Manchester, Liverpool and Birmingham are the best places to invest in the UK. Click on the hyperlinks embedded into the cities if you want to learn more.  If you are interested to explore investing in regional UK property for high returns, don’t hesitate to give us a call at +65 3163 8343 (Singapore), +603 2162 2260 (Malaysia), or email us at info@csiprop.com!

By Ian Choong
Edited by Vivienne Pal 

Sources:

  • https://markets.businessinsider.com/news/interestrates/uk-property-rents-to-rise-15-over-next-5-years-rics-1027444780
  • https://static.halifax.co.uk/assets/pdf/mortgages/pdf/August-2018-House-Price-Index.pdf
  • https://www.thisismoney.co.uk/money/buytolet/article-5771875/Landlords-offload-4-000-buy-lets-MONTH.html
  • https://www.savills.co.uk/blog/article/243068/residential-property/buy-to-let-landlords-face-falling-yields.aspx
  • Featured image: alfahir.hu

 

 

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Manchester Top 10 in the World for FDI

Manchester has chalked up yet another feather in its cap. The northern city now ranks among the world’s top 10 most popular cities for global investment, according to IBM’s latest Annual Report on Global Location Trends.

The report, IBM’s eleventh, tracked the movement of investment flows and its impact on economic growth around the world. This latest accolade adds credence to Manchester’s track record as one of the fastest-growing cities in the UK. 

Along with Liverpool, Manchester attracted 68 foreign direct investment (FDI) projects in 2017, beating other global cities like Toronto and Barcelona. Specialisms in cyber security, FinTech and advanced materials helped the city bring the largest number of investments into the UK, second to London.

The report echoes the EY Attractiveness Survey UK 2017/18 which ranked Manchester as the most successful city to attract FDI outside London. Manchester also retained its place as the UK’s Most Liveable City in the Economist Intelligence Unit’s 2018 Global Liveability Ranking.

Manchester is the fastest-growing city for house prices in the UK, followed by Liverpool. Source: Hometrack, June 2018

The UK is currently placed fifth in the list of the worlds’ most influential FDI destinations. Britain was also ranked fifth for FDI job creation, with 51,500 new jobs born out of these global investments. Manchester and Liverpool jointly created 7,000 jobs last year.

Tim Newns, Chief Executive of MIDAS, Manchester’s inward investment agency, said: “This report once again confirms Manchester as a globally significant business destination and, together with Liverpool, illustrates the potential of the Northern Powerhouse.

“Greater Manchester is ambitious, visionary and passionate about the future. Billions of pounds are being invested to create inspiring, connected business environments that support innovation and reflect future needs, and ensure that the region continues to be a draw for the world’s most innovative companies and biggest brands.

“Talent is one of the key attractors for global businesses and with student retention figures at an all-time high in Manchester, it is creating an even more compelling case for investment.”

In August, Booking.com, the world’s third largest e-commerce company announced a £100 million investment into a new global HQ in Manchester, with online health and beauty retailer The Hut Group (THG) also announcing plans to move into MediaCityUK.

This weekend, find out more about this amazing project in Manchester and how you can profit from it.

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By Ian Choong
Edited by Vivienne Pal 

Sources:

  • https://www.manchestereveningnews.co.uk/business/business-news/manchester-foreign-direct-investment-ibm-15103754
  • http://www.businesscloud.co.uk/news/tech-giant-bookingcom-to-invest-100m-in-manchester
  • Featured image: Prolific North

 

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Australia’s Population Growth Not Slowing Down

Compared to developing nations with far stronger population growth rates, Australia is expanding pretty quickly for a developed country.

Last month, Australia’s population officially ticked past the 25 million mark, according to the latest data by the Australian Bureau of Statistics (ABS) – 33 years earlier than projected!

Over the last three years, the nation’s population grew by around 400,000 people per year. If this trend continues, the number might reach 26 million in the next two to four years. This is no mean feat considering that the population Down Under was only at the 10 million mark back in 1960.

Back in 1960, the Australian population totalled only 10m. Today, the population number has ticked over the 25 million mark. For a developed nation, Australia’s population growth rate is quite incredible! Source: Supplied & News.com.au

Nett migration has continued to outpace births, with the highest migrant numbers coming from China and India.

Newly elected Minister for Cities, Urban Infrastructure and Population, Alan Tudge, in outlining plans for the country’s immigration policy, is not in favour of reducing skilled migrant numbers.

“My view has always been that Australia can be a bigger country. But, ideally, you have a broader distribution rather than very rapid growth in some areas,”he said.

Melbourne and Sydney are expected to grow to the size of New York city by 2050 as migration numbers continue to grow.

To date, Melbourne has the fastest-growing population rate in the country. Naturally, this has something to do with Melbourne’s ranking as the World’s Most Liveable City for seven consecutive years, receiving a perfect score from The Economist for healthcare, education and infrastructure.

“There’s a buzz about the city that keeps bringing the world’s best to enjoy Melbourne,” said the Australian government in a statement.

Victoria has an estimated population of 5.71 million, ranking second in the country with a population density of 25 people per sq km. The state accounts for 25% of the entire Australian population. 

And, for the first time ever, Victoria finally overtook New South Wales as Australia’s strongest economy in CommSec’s latest State of the States report.

Victoria’s high population growth has also supported house prices and rental values in Australia, and is a reason why the Melbourne market has remained strong.

In quarterly data by JLL Australia, apartment price growth for Greater Melbourne (for both new and existing stock) increased 6.6% y-o-y to 1Q2018, which is above the five-year annual average rate of 4.5%. Rental vacancy remains tight in the city.

The recent 2018 Global Real Estate Transparency Index by JLL ranks Australia’s property market as the most transparent in the Asia-Pacific region. This, and the all the things that make Australia such an attraction — good governance, strong healthcare and education systems, etc — are a great draw for property investors and millionaires.

What do you think of Australia’s population growth for the Australian economy and property market as a whole? Leave your comments in the box below! For more details on investing in Australian property, call us at 65-3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

By Noorasikin Ali
Additions & Edits by Vivienne Pal

Sources:

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Is the UK on Sale?

(LAST UPDATED 15/10/2018)

One of the latest movies to hit the cinema, Crazy Rich Asians, features the members of the wealthy Young family, who are termed “not just rich, but crazy-rich”. As the story goes, the family made their fortune through investing in property.

Yes, property is tangible and finite – there’s only so much of it on this planet, so it will always be in demand. But some places are better than others. As any seasoned property investor will tell you, location is perhaps the most important thing to consider for the best returns.

In Singapore, house prices as a whole have dropped 5% since 2011. Some areas have been hit more heavily than others. One of the worst hit was Sentosa Cove, where average prices were down by almost 30% from their 2011 highs.

Residential property on the island city remains highly regulated, and a string of cooling measures by the Government this February put a halt on the short run of growth since last year. In Q3 2018 prices went up by 0.5%, compared to the 3.4% rise in Q2.

Other than the slowdown in growth, an additional hit on property investment in Singapore is that local and foreign buyers now have to pay an extra 5% in stamp duty, further reducing returns.

Right now local property investment appears to be giving less-than-stellar returns. So, if not in Singapore, where then can Singaporeans looking to be crazy-rich put their money?

Currently the exchange rate for the pound sterling is at S$1.81 to £1 (15 Oct). Prior to the 2007 Financial Crisis, the exchange rate hovered at around S$3 to £1.

GBP to SGD over last 20 years (Exchange Conversions)

This means that essentially, the UK is on sale for Singaporeans at a 40% discount compared to a decade ago!

The UK is also facing its biggest ever housing shortfall in England alone, there is a total backlog of almost 4 million homes.

Research by Heriot-Watt University shows England must build 340,000 homes per year until 2031 to meet demand a figure significantly higher than the government’s estimates.

This shortfall in housing is not new, and multiple failures of the UK Government to spur the house-building industry have caused prices to soar. House prices in the UK grew 32.28% over the past 5 years, and a whopping 323.58% over the past 25 years!

CBRE Research predicts house prices to continue to rise. For the next 3 years, house price growth is estimated to increase by 17.1%, while rental is expected to grow by 21%.

UK house price and rental forecast 2018-2021 (CBRE)

Regional cities in the UK are great places to invest in real estate, as their frenzied pace of development continues, compared to the over-saturated market of London.

These British regional cities have shown the most promising growth: over the past 12 months since June, Manchester clinched top spot at 7.4%, followed by Liverpool at 7.2%, and Birmingham at 6.8%. Compared to these, the capital only managed a dismal 0.7%.

Price growth of UK cities in last 12 months (Hometrack)

As long as supply is unable to keep up with demand, prices will continue to rise. For the foreseeable future, England’s shortfall in housing is not going to be solved soon, and Singaporeans can take advantage of the currency rate and purchase UK real estate at a discount!

Are you looking to invest in UK real estate? Don’t hesitate to give us a call at 65-3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

By Ian Choong
Edited by Vivienne Pal 

Sources:

  • https://gbp.exchangeconversions.com/sgd/charts#chart_20years_rate
  • https://csiprop.com/should-you-invest-in-property-in-singapore/
  • https://csiprop.com/could-birmingham-be-the-next-london/
  • https://csiprop.com/uk-property-investment-beyond-brexit/
  • https://www.independent.co.uk/news/uk/home-news/housing-homeless-crisis-homes-a8356646.html
  • http://www.theedgemarkets.com/article/singapore-home-prices-rise-even-after-additional-property-curbshttps://sbr.com.sg/residential-property/in-focus/singapore-housing-market-fairly-valued-ubs
  • Featured image: The Straits Times