No Comments

Manchester & UK Regional Cities Lead Property Price Growth

Image credit: http://dailym.ai/2BG4GFG

The latest census on UK property price growth has been released by HM Land Registry and Office for National Statistics (ONS), showing tht UK regional cities top property price growth in the country.

It also shows a promising annual growth rate of 5.2% recorded in the month of December, 2017 — a 0.2% increase from the previous month. The average house price in the UK stood at £226,756 in December, approximately £12,000 higher than in December, 2016 and £1,000 higher than last month.

Regionally, the Southwest, which includes the cities of Bristol, Plymouth and Salisbury, earned the best track record, with the highest annual growth rate of 7.5% approaching the month of December.

The Southwest is followed by the West Midlands, which includes the city of Birmingham, with an  annual growth of 6.3%. Meanwhile, the East Midlands also recorded similar property price growth levels.  

London experienced the lowest annual property price growth, at 2.5% — on the bright side, those looking to purchase homes in London for possible stay can enjoy affordable prices while they last.

Rising rates in the South West, East Midland and West Midland show positive outlooks for areas outside London (Img source: http://bit.ly/2C045Ql)

James Cameron, director of estate agency Vesper Homes, said landlords are selling up in London and looking for buy-to-let opportunities elsewhere, which is benefiting first-time buyers in the capital.

“Landlords are therefore selling up so they can invest outside of London or trade up to a larger property which frees up the smaller ones for first-time buyers,” he said.

Property price growth: what this means for investors

What can be derived from recent trends seen in areas outside England’s capital is that the regional market holds the greatest appeal to the savvy investor.

Savills identifies Birmingham, Manchester and the overall Northwest as the top places for buy-to-let investors, with the highest comparative returns. They predict a 4.5% average annual return for Birmingham and Manchester, and 4.1% for the Northwest. Mortgage brokers Private Finance place Liverpool at the top for nett rental yields in 2017 once mortgage costs are taken into account, at a whopping 8%.

Price change by local authority for the year till November 2017 (Source: Gov.uk)

While house prices in London remain the highest, the affordability and potential of regions outside London make investing in property outside the capital so much more attractive.

Addressing the elephant in the room

While Brexit continues to amass uncertainty within the property market, the house price growth indicates resilience in the housing market supported by the undersupply of housing in the UK.

Recent news regarding property in London illustrates the housing crisis. Micro-flats, housing units that can take up as little as 31 square meters in total, show the extent to which the UK must reach to meet the demands of a growing population.

Just this month, the Mayor of Watford, Dorothy Thornhill, voiced her concern after the council learned it might have to double the amount of houses it must build as part of the latest attempt by the Government to tackle the nationwide housing crisis.

In Birmingham, last month, a plot of land previously caught in a “store-wars” battle between a shopping centre owner and supermarket giant Sainsbury, has finally been claimed by Seven Capital, a property investment company in the UK. The plot of land, between Sutton road and Orphanage road, is being converted into new apartments, undoubtedly a consequence of critical undersupply of houses currently affecting the city.

Late last year, it was reported that the dire undersupply of houses in Brighton and Hove would scarcely be supported by the Prime Minister of England’s solution to deliver 5,000 houses a year throughout the UK, which would bring only around a dozen new houses to the previously mentioned areas. This leaves room for private developers to establish themselves where demand is exceptionally high.

The housing market in the UK is still growing and you can be a part of it – should the positive outlook on the property market in the UK pique your interest, do contact us to get involved.

Article by Nimue Wafiya

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and commercial property including student accommodation and carehomes, in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). 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 and due diligence. 

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 is Fastest Selling in Australia

There is incredible demand for property in Melbourne – the fastest selling city in Australia and with extremely low vacancy rates

In Melbourne, house vacancy rates become tighter even as property flies off the market at amazing pace — a clear indication that the city’s property market is undersupplied. Melbourne property is the fastest selling in Australia

Melbourne property is currently the fastest selling amongst Australian cities, at an average period of 33 days. The city tied with Hobart at the top spot, according to a CoreLogic Property Pulse report.

The report revealed that properties sold privately in Australia last year took an average of 45 days to change hands. 40 days was the average for properties in the capital cities.

The average time taken to sell a property was 41 days in Adelaide, 42 in both Sydney and Canberra, 47 in Brisbane, 53 in Perth and 75 in Darwin.

CoreLogic state director for Victoria, Geoff White said that strong buyer demand was keeping Melbourne’s average days on market low, with properties in popular parts of the city commonly selling within a week. He also said that the days to market would remain low for the foreseeable future.

“It won’t change that much unless something significant happens, like an interest rate rise that cools buyer demand, or an influx in supply,”

During this recent Chinese New Year week, Chinese investors had Melbourne property in their sights — up to 125,000 Chinese nationals were Melbourne-bound to celebrate the Golden Week holiday

Carrie Law, the chief executive of leading Chinese property website Juwai.com said that this may be the biggest week of the year for Chinese property buying in Melbourne.

A recent survey done by the portal shows that Australia is the second favourite offshore investment destination for Chinese buyers, behind the US.

Realestate.com.au chief economist Nerida Conisbee said suburbs around Melbourne’s top universities continues to draw strong interest.

“There’s still very much an education focus for Chinese buyers,” she said. “They really continue to see educational institutions as aspirational locations and are looking close to Melbourne’s best universities, Melbourne Uni, Monash Uni, RMIT.”

Low Vacancy Rates & Housing Undersupply 

Even as houses fly off the market, rental prices are rising in Melbourne due to the low vacancy rates.

Figures from SQM Research show just 1.8% (9744 properties) of property in the city was available for rent, down from 2.1% (11,478) in December.

SQM director Louis Christopher said this shows that the dire warnings of apartment oversupply have not eventuated. On the contrary, it looks like there is a housing undersupply in Melbourne. 

“What’s happened here is the population growth rate is a lot faster than the Australian Bureau of Statistics expected and that’s absorbed the additional stock in the market,” he said, adding that  vacancy rates in the Southbank market fell to 3.9% from 6% in January 2017 and Docklands is at 2.8%.

A population growth rate of 2.4% indicates 110,000 people are moving to Melbourne every year. The vacancy rates continue to fall due to the severe undersupply of housing.

Melbourne’s price growth has lowered from the rapid rises seen previously, which will further increase rental take-up and sales. Yet, the city’s price growth continues to outpace all other mainland state capitals, at 7.3%.

Article by Ian Choong

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and commercial property including student accommodation and carehomes, in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). 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 and due diligence. 

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: Favourite Investment of Institutional Investors

UK Student property is regarded as one of the strongest investment platforms today (Img source: http://bit.ly/2EhQLnQ)

This month, a Scottish property developer signed a £500m joint venture with a US company to build student accommodation across the UK. The Glasgow-based Structured House Group (SHG) said the agreement with Harrison Street Real Estate would lead to 5,000 apartments being built over the next five years, with potential sites already identified in the northwestern cities of  Manchester and Liverpool, and Scotland. Many institutional investors, both private and state-owned, are pouring money into UK student property, also known as purpose-built student accommodation (PBSA), today.

According to latest figures by the IE Business School in Madrid, sovereign wealth funds have quadrupled their investment in student housing in both Europe and the US, from under 4% a year between 2011 and 2015 to more than 15% in 2016. The sharp increase in investment in the sector is based on the potential growth of wealthier middle classes in emerging economies looking to send their children to study abroad.

In 2015 and 2016, Malaysia’s Felda Investment Corp Sdn Bhd (FIC) launched two investments in the student accommodation market in London worth £168 million.

And from Singapore down south, Mapletree and GIC spent a combined £1.2 billion on student housing in the UK in 2016, in cities like Leicester, Birmingham, Nottingham, Oxford, Edinburgh, Manchester and Lincoln. Singapore holds the title of being the largest investors in student property in UK (and beyond) in recent years.

UK Student Property: Most Favoured Investment

UK student property is regarded as one of the strongest investment platforms today, surpassing other traditional real estate classes. There an acute undersupply of student housing in the UK due to restrictions in building permissions, a challenging planning environment and the government’s support for housing development. This limits the existing residential housing stock that is available for students to rent.

Universities face many of the same problems with building student halls. Students are typically only guaranteed their first-year of accommodation, and left to seek a room of their own after that. Purpose-built student accommodation, thus, are designed to not only solve the dual problems of inadequate university-managed accommodation and residential housing to let, but to go further, and provide a higher standard of living for the discerning student.

In 2016-17 the number of students living in private accommodation increased to 141,210, a growth of 6.4% from 132,720 last year. This trend is predicted to continue, fuelled by the inability of university-managed accommodation to keep pace with student numbers, and a more discerning and affluent student population. Unite Group reports that 85% 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). CBRE statistics shows that student accommodation generally has occupancy rates of about 99%, and, for investors, tenancy is virtually assured.

By 2017, the UK student accommodation market was estimated by Knight Frank to be worth some £46bn and growing. James Pullan, Knight Frank’s head of student property said that there are more investors in the sector now than there has ever been.

“It is one of the few sectors in the property world that has delivered consistent rental growth every year since the economic downturn. More than 70% of investment is coming from overseas buyers, from sovereign wealth funds and ultra high net worth individuals (people with investable assets of more than $30m) and private equity,” he said.

UK student property used to be the sole domain of the institutional investor. In recent years has it been packaged to be accessible by the individual investor, adding to the appeal of this investment class. Its price points are affordable at approximately £65K onwards per unit, which is a steal compared to the price of a London apartment which easily costs more than £500K — and which cannot fetch annualised returns that come close to the 8% that UK student property can. 

UK student property is a sought-after investment due to its returns. Image” CSI Prop

Student Arrivals Fuel UK Student Property Demand

Meanwhile, students continue to enrol into UK’s higher education institutions. The Government’s removal of the student cap will maintain a steady stream of foreign students applying to study in Britain, buttressing demand for proper accommodation and providing opportunities for investors.

In 2015-16, there were almost half a million non-EU students in the UK, about one-fifth (19.2%) of the 2.3 million total. In the 2017/18 academic year, non-EU applications had risen by 2.2% even while EU applications had fallen ostensibly due to Brexit.

The Higher Education Statistics Agency (HESA) reports that entrants to full-time first-degree, postgraduate taught and postgraduate research courses have increased considerably in the past 10 years (by 31.2%, 30.5% and 25.7%, respectively), and the proportion of 18-year-olds applying and entering higher education were at record levels.

London’s full-time student population alone is expected to rise by 50% in the next 10 years, whilst regional 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.

Ultimately, investors are in it for the returns: UK student property can fetch yields of more than 8% annually. Additionally, PBSAs are categorized as commercial property and, thus, benefit from tax exemptions that residential property does not qualify for. This allows the return on investments to be higher than other classes of real estate. In 2017, market transactions exceeded that of 2016 at £3.61 billion, but , with a further £1.05 billion under offer (unlike 2016) and £1.5 billion in the market, double the totals for 2016.

What makes PBSA such a property hotspot, at the end of the day, is the combination of internationally respected higher education, structural undersupply and steady rental growth. It has proven to be recession-proof and will be Brexit-proof, too. This offers investors a safe and stable place to put their money.

Hiew Yoon Khong, chief executive of Temasek’s real estate arm Mapletree, Singapore, sums it up best: “Student accommodation is a big business and relatively low risk.”

 

Article by Ian Choong

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and commercial property including student accommodation and carehomes, in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). 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 and due diligence. 

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

4 Comments

Cadbury, Our Chocolate Fantasies & Investing Practically

The best form of non-fiction is arguably the memoir — who wouldn’t want to know how Obama did it? From Anthony Kiedis’ wayward history in ‘Scar Tissue’ all the way to Frank McCourt’s harrowing upbringing in ‘Angela’s Ashes’, everyone seems to have lived long, tough and stupendous lives.

Yet, as monumental as these memoirs are, there may never be a story quite like the experiences of the lucky people who get to eat chocolate for money. Yes, for. At £9 per hour, to be exact.

If you haven’t heard, Cadbury, the second largest multinational confectionery company in the world, recently announced the yummiest news: they are looking for chocolate tasters to taste-test their latest inventions in Reading, UK,  before the products hit the shelves! Talk about doing what you love for a living; chocoholics finally get to embrace their ikigai.

As deliciously nuts as this news may sound, the UK is no stranger to unconventional occurrences like this. With the upcoming cheese festival in Reading, anti-Valentine’s day events in London and the annual sheep race that happens in Yorkshire, the UK pretty much has it all!

Because of the excellent job market (as illustrated by Cadbury), education market (we know this) and overall communal togetherness in the UK (people are nice), the UK property market  is allowed to flourish.

Like Cadbury, the UK property market can give you just as many sweet returns; a long list of satisfied local and international investors can vouch for this.

While the UK property market has taken some minor hits from the looming Brexit, recent price recoveries reveal its resilience in the face of political and economic upheaval.  And, unlike the volatile stock market, property, when invested in the right places, is known for its comfortingly steady returns!

CBRE’s 2018 Market Outlook forecasts continuing economic growth for the UK despite the uncertainties caused by Brexit. The report states that those uncertainties are likely to peak this year.

Underpinning the property market is the fact that there is a chronic undersupply of houses that will undoubtedly support price growth. Simply put, UK property prices are, in a way, a barometer to gauge the UK property market. To illustrate, here is a slightly more in-depth view of the current state of the property market in the UK:

The Royal Institution of Chartered Surveyors (RICS) expects prices to drift higher in some parts of the UK with the strongest gains in Northern Ireland, Scotland, Wales and northwest of England, which includes cities such as Manchester, Sheffield, Liverpool and Newcastle. But, a slump in asking prices across London and the South East will drag down prices in the rest of the UK so that overall growth remains flat.

The Government recently announced its ambition of building 300,000 homes a year in the Autumn Budget alongside a tranche of policies aimed at increasing the UK housing supply. However, RICS said that as many of these measures won’t come into effect until the mid-2020s, they will do little to alleviate the immediate housing crisis.

Which means that demand will continue to uphold price growth in the housing market. 

Back to Cadbury and its offer of a job of a lifetime — application closes on Feb 16 🙂 Time to get cracking on that resume. But if you’re not in a position to do so and want to invest in property instead, we can help you with that 🙂

Article by Nimue Wafiya

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and commercial property including student accommodation and carehomes, in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). 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 and due diligence. 

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 Spiraling Growth of Melbourne CBD

Housing is a necessity in Melbourne. As the population continues to swell, so must housing supply.

Perhaps the easiest measure of how deserving Melbourne is of the World’s Most Liveable City title for the 7th consecutive year, is its increasing population growth. That, and the fact that it is perhaps the most populated state capital city in Australia, with 75% of the population of the entire state of Victoria living in Melbourne city alone.

In 2016, the Australian Bureau of Statistics (ABS) reported Melbourne as having the most epic population growth of any Australian city, making up almost a third of Australia’s population growth. The contrast is quite significant, with 2.4% in Melbourne compared to 1.2% in the rest of Australia.

Australia’s population growth is faster than many OECD countries including Malaysia, Philippines, Singapore and the UK. Image source & credit: ABS(For the record, Australia’s population growth is faster than many OECD countries including Malaysia, Philippines, Singapore and the UK. This is an interesting fact because a developed nation’s growth is typically slower than that of a developing nation, hence property prices should grow faster in a developing nation. Australia, however, is the exception.)

In ABS’ latest report, Melbourne (Victoria) continues to headline the country’s population growth of 388,100 people, with an increase of 2.3% year-on-year.

But first, a short lesson in geography: Melbourne, with its population of approximately 4.8 million people, comprises the broader metropolitan area (also known as Greater Melbourne) as well as the city centre. Altogether, it consists of 31 municipalities.

However, this article specifically refers to the city of Melbourne which encompasses the Melbourne CBD, Southbank, Docklands and many of the suburbs in Melbourne’s inner city.

As of 2016, the estimated  residential population in the municipality of the City of Melbourne was 151,176. A whopping approximate of 903,000 people people were recorded as having travelled to, or were present in the municipality on an average weekday in that same year, an increase of 6% from 2014.

Statistics in the City of Melbourne’s Daily Population Estimates and Forecasts reveal that expansion in the city will continue, and is expected to hit 266,455 residents by 2037 due, largely, to births and immigration.  According to projection estimates, there will be over 1 million people in the city on an average weekday within the next 5 years, and 1.4 million by 2036.

By 2037, the population of Melbourne (CBD) is expected to reach 76,982. This is 44.68% higher than the population in 2017. Image redit & source: http://bit.ly/2rYxoi3

Recently, BIS Oxford Economics predicted that Melbourne is headed for an undersupply in housing. What makes this especially noteworthy is the fact that it was a complete reversal of its earlier prediction that the city would suffer a surplus of apartments! The consultancy has based its forecast on census figures that show Melbourne had 109,000 more people than previously expected.

“We thought it would get to a 20,000 excess (of apartments) in Victoria by 2018. We’re now saying in 2018, the market has still got an undersupply of about 2000 dwellings. We’re talking a 20,000 turnaround,” said BIS managing director Robert Mellor.

There are currently 25,321 private dwellings in Melbourne (CBD). By 2037, this is expected to increase to 56,838. Image source & credit: http://bit.ly/2rYxoi3

Spiralling Growth in the CBD

Figures by the ABS show that between 1991 and 2016, the population living within 10km of the CBD grew by 40%, from 743,000 to 1,042,000.

Melbourne’s CBD has also seen spectacular growth; with its population swelling from 1611 in 1911 to 15,249 in 2006 and 35,447 in 2016.

The increase in population is reflected by a sharply-tightened vacancy rate of 1.7% and 1.4% for apartment units and houses at as recent as Q3 2017.

According to Mellor, census figures show that the proportion of students rose to 27% demand for inner city apartments in 2016, from 20% in 2011. Students comprise a key demographic occupying apartments in the CBD, where Melbourne’s high-rise supply has been concentrated.

The increase in population is reflected by a sharply-tightened vacancy rate of 1.7% and 1.4% for apartment units and houses in Melbourne at as recent as Q3 2017. Image source & credit: Domain.com.au

According to SQM managing director Louis Christopher, the last time the figure slipped as low as 1.7% was in June 2007.

“This is quite remarkable — despite predictions of looming apartment oversupply in inner-city Melbourne, we are seeing vacancies fall rather than rise,” he said.

“Even in the Docklands the vacancy rate tumbled to just 2.4% (as at July 2017), down from a high of 6% in December.”

The tight vacancy rate is good news for landlords, especially if seen from the perspective of future population growth.

By 2037, the CBD’s population is expected to reach 76,982, 44% higher than the population in 2017. Interestingly, this growth forms 29% of the total projected population growth of the City of Melbourne within the same time frame — a significant percentage, particularly if you consider that the CBD spans an area of about only 6.2km2!

In terms of age, the CBD population will be dominated by the 25- to 34-year-olds, followed by the 35- to 44-year-olds by 2037. Logically and based on current property prices, the 25- to 34-year-olds represent the demographic that is most likely to rent a property.  Image credit & source: http://bit.ly/2rYxoi3

In terms of age, the CBD population will be dominated by the 25- to 34-year-olds, followed by the 35- to 44-year-olds by 2037. Logically and based on current property prices, the 25- to 34-year-olds represent the demographic that is most likely to rent a property.  

Meanwhile, housing looks set to increase too, with the number of private dwellings projected to grow to 56,838 in 2037, compared to 25,321 dwellings in 2017.

Back in the day, the CBD was probably last on a laundry list of choice residential areas, but this trend is changing. While the CBD may not be the cheapest area to live in Melbourne, there is a growing community of residents.

What will continue to draw the crowd and keep the CBD alive, are its industries and jobs, and its proximity to universities, festivals and the arts, food and beverage, services and retail.

Article by Vivienne Pal

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and commercial property including student accommodation and carehomes, in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). 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 and due diligence. 

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 Top Investment in Bristol

The number of students needing accommodation in Bristol is projected to grow to 44,000 by the 2018/19 academic year.

Growth can be attributed to the city’s two notable universities, the University of Bristol and the University of West of England, which has a combined total of just over 40,000 full-time students. These two institutions have driven Bristol’s continued demand for student accommodation, providing a prime opportunity for developers and investors.

The University of Bristol, in particular, is a member of the prestigious Russell Group of Universities, which represents 24 leading universities in the UK. Ranked 9th in the UK according to the Times Higher Education League Tables, the university has long experienced high student demand and seen a 20% increase in applications since 2012. The Universities and Colleges Admissions Service (UCAS) has named it the 6th most oversubscribed university n the UK — demand for places at the university exceeds even that of the world-famous King’s College London or Queen Mary University of  London!

Adding to the allure is the value a University of Bristol degree holds in the working world. A research by Savills has shown that British universities boasting high graduate salaries see a bigger increase in applications over the past five years, compared to the rest. The research reports that graduates from the University of Bristol  are most likely to go on to jobs that pay £2,700 above the average in the UK.

The University of Bristol is currently embarking on an ambitious expansion of its facilities, which includes plans for a brand-new £300m Temple Quarter Campus situated next to Bristol Temple Meads train station. Image credit: http://bit.ly/2Fsk1Zb

The University of Bristol is currently embarking on an ambitious expansion of its facilities, which includes plans for a brand-new campus right in the city. The £300m million Temple Quarter Campus will be situated next to Bristol Temple Meads train station,  in the centre of the Bristol Temple Quarter Enterprise Zone, one of the largest urban regeneration projects in the UK. Once completed, it will provide study places for 5,000 new students, which will starkly increase the city’s demand for student accommodation. The new campus is expected to open in time for the start of the 2021/22 academic year.

 

Savills: Bristol is Top 12 in PBSA investment

Currently there is a significant demand for student accommodation in the city.

Savills puts the city of Bristol in its first-class tier, or top 12 cities in the UK for investment in the commercial purpose-built student accommodation sector, based on the current and future projected supply of student property, demand, affordability and potential for rental growth.

Backing up Savills’ research is a study by Sellhousefast.uk, which places Bristol in the top 20 cities in the UK by demand for student accommodation, at a ratio of about 1 bed to every 2 students (1:1.93).

Investors who invest in Bristol student property can expect favourable returns on their investments. According to the Cushman & Wakefield Student Accommodation Tracker 2017/18, en-suite rents in Bristol went up by 4%, tying with Birmingham as the highest increase of all cities in the UK. En-suite bed spaces represent 56% of the student property market, whilst studios account for 12% of all beds.

James Pullan, head of student property at Knight Frank, says Bristol is structurally undersupplied.

“As is apparent from the figures, Bristol needs purpose-built accommodation. It doesn’t have enough. If you look at the university projections, it still needs more. The market would not be saturated if another 4,000 beds came to market,” he says.

 

And Much More

There’s much more to Bristol than top-notch universities, which makes it a great place to live and work in.

Bristol has been voted the best place to live in the UK by the Sunday Times in 2017. It was announced as the Green Capital of Europe for 2015 and has numerous eco-friendly projects, from fish farms and tidal generators to the infamous ‘poo bus’ — a bus powered by methane generated from the Bristol Sewage Treatment Works.

Bristol also has the reputation of being England’s first “cycling city”, with a report stating that 24,000 cars are kept off the streets everyday, thanks to cycling. 

Named the Green Capital of Europe for 2015, Bristol is also England’s first “cycling city”. Image credit: http://bit.ly/299HZdv

Economy-wise, Bristol performed strongly in 2016, recording a 2.4% increase in YOY economic growth and moving into 10th place in a league table for city growth, according to a study by the Centre for Business & Economic Research (CEBR). The report projects Bristol’s economy to grow 15.7% by 2026.

Jobs are also being created in the city, and accessibility, increased.

The Bristol Temple Quarter Enterprise Zone, a 70-hectare enterprise zone in the city is expected to draw talent from the creative, high-tech and low-carbon industries. Since 2012, over 3,000 people have come to work in the Enterprise Zone. The target is 22,000 jobs over the lifespan of the project.

The Temple Meads railway station, which is being redeveloped by Network Rail to be a brand-new transport hub, will improve access to surrounding neighbourhoods and the city beyond.

In conclusion, there is a significant market for the commercial student property sector in Bristol, and investors can capitalize on that. The student population is set to increase over the next few years, and the current lack of supply of student beds gives great potential for growth in this sector. The residential property sector, meanwhile, looks to benefit from increasing jobs created in the city.

Article by Ian Choong

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and commercial property including student accommodation and carehomes, in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). 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 and due diligence. 

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

Generation Rent & The Property Ladder

Does getting on the property ladder exist merely as an idea in the UK now, especially for young people such as the Gen-Y-ers or the Millenials? CSI Prop explores the notion of Generation Rent and how this is an opportunity for the rental market in Britain.

What most call the property “ladder” is the idea that homeowners will own different homes according to their needs during their lifetime.

A young couple early on in their careers would ideally buy a “starter home” and move on to a larger (and more expensive) property when they plan to have children. This has been possible in the past, because their household income would have increased through salary growth and career progression.

However, with wage stagnation, rising house prices and the squeeze on the cost of living today, this may be quite impossible for them, and many others like them.

The average UK house price is, at just over £200,000, almost 10 times the average wage, compared to just under four times the average wage at £31,000 in 1985. Home ownership in the UK has fallen to 63.8% (from 70.8% in 2003).

According to research by PwC, almost 60% of 20- to 39- year- olds in England will rent their homes by 2025, while just 26% will have got on the housing ladder.

 

Renting: the new normal?

Renting has become the new normal for millions of people in the UK. Rising house prices and a lack of new homes for first-time buyers takes home ownership out of reach of millennials, particularly in the southeast of England, where house prices have far outstripped salaries. And with the burden of debt from student loans (the an average debt is £32,220 for graduates in England), it’s easy to see why many think twice about taking on a mortgage.

A survey indicated that over three-quarters of British adults aged 18 to 30 don’t believe they will ever be able to afford to buy a home even though they have full-time jobs.

Philip, 26, from Yorkshire, said this of his experience so far: “By the time you have saved up an extra £1000 towards a deposit, the house values have gone up by £2k, £5k, £10k. It’s impossible.”

“It’s embarrassing to still live at home with your parents, even though I know increasing numbers of people in their 20s are doing so. It’s annoying that my life in that respect hasn’t turned out how it planned. I left uni at 23 telling myself that my move home would be for a few weeks at most, and I’m still there 3 years later,” he says.

Some, like Jamie, a Business Manager for a Health GP Company in Northumberland, have a slightly different view.

“I have no issues with (renting). There is, to a degree, temporised value; you can often live in a nicer area, nicer street etc. for a cheaper monthly payment than a mortgage payment. Some see renting as ‘throwing money down the drain’ but I see it differently. Renting allows you to become, in some odd regard, a more static member of the travelling community.” he says.

Other countries across the Channel don’t look as highly towards house ownership like the British. In France, just over 50% of the population live in their own properties. And in Paris, the figure is less than one in three. In Germany, house ownership is even more scarce. Only 39% of Germans own the homes that they live in, and in Berlin this figure dwindles down to just a mere 13% of the population owning their own home!

Could this be the future of house owners in the UK?

The decline of the “property ladder”, or house ownership means a large potential market for the buy-to-let investor in the UK. Even as the introduction of the stamp duty surcharge on additional property and changes to tax relief have eaten into landlords’ profits, the market continues to grow amid the high demand and low supply.

We see regional markets as the best option for investors looking to make high returns with low capital in the UK. The Government’s ongoing push for the Northern Powerhouse, which includes Liverpool, Manchester and Sheffield, is a good indicator of the potential for future property price growth and solid returns.

Liverpool postcodes dominate the top 25 areas of the buy-to-let yield list, with L7 – which covers the city centre, Edge Hill, Fairfield and Kensington – taking the top position with a huge average yield of 12.63%. This is based on a median rental value of £1,224, and a median asking price of £116,259. There is high rental demand in Liverpool as the city is home to three universities as well as a growing number of young professionals.

Other top performing Liverpool postcodes are L6 in second place with a 10.57% average yield, L15 in third place with a 10.29% yield, L1 in 10th place with an 8.61% yield, and L3 in 11th place with an 8.47% yield.

Manchester also makes a couple of appearances in the top 25, with M6 – which encompasses increasingly popular Salford – in 14th position with an average yield of 8.25%. The rental market in Manchester has been growing in strength in recent years, and its four universities provide ample opportunities for landlords who are willing to invest in student accommodation. Sheffield makes the cut for the top 25 as well, with its S2 postcode at 16th place, giving an average yield of 8.07%.

The Northern Powerhouse, ie, the British government’s attempt to rebalance the UK economy by pushing development upwards into the regions to bring it on par with that of the capital and southeast, can only be a good thing.

Article by Ian Choong

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and commercial property including student accommodation and carehomes, in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). 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 and due diligence. 

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 2018

In 2017, low mortgage rates and healthy employment growth continued to support demand for property, whilst supply constraints provided support for house prices. However, this was offset by the looming Brexit and mounting pressure on household incomes, which exerted an increasing drag on confidence as the year progressed.

As we go into 2018 with no indication that a Brexit deal is about to be reached, some uncertainty still plagues the property markets. Nevertheless, investor confidence has returned, as can be seen from the recent price recovery. In this article CSI Prop analyses the current trends and predictions of the property market for the year.

CBRE’s 2018 Market Outlook forecasts continuing economic growth for the UK, despite the uncertainties caused by Brexit. The report states that those uncertainties are likely to peak this year.

Some sectors will weather the uncertainty well, including industrials and the so-called ‘beds’ sectors (build-to-rent, hotels, student accommodation and healthcare). This is because these sectors exhibit non-cyclical characteristics, or serious mismatches of supply and demand, or some form of structural change.

In its annual market housing forecast, the Royal Institution of Chartered Surveyors (RICS) said that house price growth in the UK would slow with the number of transactions falling slightly, driven by political and economic uncertainty surrounding Brexit and the lack of available stock.

However, despite these factors weighing on the market, the chronic undersupply of housing is likely to support prices, the organisation said. RICS expects prices to drift higher in some parts of the UK with the strongest gains in Northern Ireland, Scotland, Wales and the northwest of England, which includes cities such as Manchester, Sheffield, Liverpool and Newcastle. But, a slump in asking prices across London and the South East will drag down prices in the rest of the UK so that overall growth remains flat.

The Government recently announced its ambition of building 300,000 homes a year in the Autumn Budget alongside a tranche of policies aimed at increasing the housing supply. However, RICS said that as many of these measures won’t come into effect until the mid-2020s, they will do little to alleviate the immediate housing crisis.

 

Residential property to increase across UK

In 2018, the Office for Budget Responsibility expects a 3.1% increase of house prices across the UK, with prices bolstered by first-time buyers benefiting from the stamp duty cuts. Countrywide, the biggest agency in the UK, thinks prices across the country will go up by 2%. More conservatively, real estate firms Savills and JLL both predict a rise of 1%.

Of the two big lenders that operate well-known price indices, Nationwide said it expected property values to be broadly flat in 2018, with perhaps a marginal gain of around 1%. Halifax allowed itself some wiggle room, predicting UK growth from 0% to 3%.

However, in January 2018, the market has, so far, outperformed expectations. Rightmove stated that the average price of a property coming on to the market has gone up by nearly £2,000 compared with last month.

The Office for National Statistics (ONS) reports that the average house price in the UK as a whole was £226,000, up 5.1% YOY.

Average UK house prices from January 2005 to November 2017 (Souce & credit: ONS).

Russell Quirk, chief executive of online estate agent eMoov, is broadly optimistic about the market in 2018: “UK house prices are up 5% since last December and we predict that they will continue to increase at a similar rate in 2018 as the market has already begun to find its feet again.”

Public confidence in the market has risen beyond initial forecasts, and we think that the outlook for the market, as a whole, is positive.

 

London property charts weak growth

Homes in the capital sold for an average of £482,000, an increase of 2.4% (£11,000) in 2017, according to the latest figures from Land Registry and ONS.

London’s house prices remain the highest in the country but the capital continues to experience the weakest price growth as buyers continue to be held back by affordability constraints.

Richard Snook, senior economist at PwC commented: “Continuing the recent regional trend, London is the weakest performer. House prices have now declined for four consecutive months, from the high of £490,000 in July to £482,000 in November.

“But due to growth earlier in the year, prices are still 2.3% higher than 12 months ago,” he said.

 

Regional markets

The strong 5% (£11,300) increase in house prices was thanks, in part, to strong annual growth in the regional markets.

This increase was led by the West Midlands region, where the average sold price was £192,000, which is 7.2% higher than a year before.

Manchester had one of the highest price growths, up 12.7% with an average sale price of £175,312, whilst Liverpool gained 10.8% (£131,707). Sheffield was up 8.1% (£160,974) with Birmingham at 7.8% (£177,728). London was a drag on overall growth, with the central city having a drop of 10.9% (£729,134).

Annual Price Change by local authority, year to Nov 2017

The figures also showed rises in lending to home movers and remortgaging, despite the Bank of England’s decision to raise the base rate to 0.5% last November.

“The data shows housing market activity remains buoyant, despite November’s rise in the base rate,” said Paul Smee, Head of Mortgages at UK Finance.

“Steady increases in lending for house purchases together with increases in homeowner remortgages reflect a keenness among consumers to benefit from still historically low interest rates, and a highly competitive marketplace,” he said.

Meanwhile, the B16 postcode — Ladywood, in Birmingham, named last year as having the highest levels of child poverty in the UK — has seen the sharpest rise in property prices, according to Barclays Mortgages. They rose by 17% in 2017, as buyers snapped up cheap homes. The Office for National Statistics says Brum lured 6,510 Londoners last year, with 5,280 going back to the capital, thanks to employers such as HSBC and HS2 expanding in the city.

Hometrack says that in Glasgow, Liverpool and Newcastle, the current house-price-to-earnings ratio is lower than the 15-year average, which makes them good value ahead of likely increases in the longer term.

Savills identifies Birmingham, Manchester and the overall Northwest as the top places for buy-to-let investors, with the highest  comparative returns. Image credit: propertyreporter.co.uk

Rental yields

The buy-to-let market has faced tougher taxes and mortgage affordability criteria over the last year. The introduction of the stamp duty surcharge on additional property, changes to tax relief and tighter lending criteria have cut into landlords’ pockets.

According to UK Finance, the number of buy-to-let mortgages granted for purchasing a property was 75,300 in the year to the end of August 2017 – 47% lower than in the year to March 2016. The growth in the number of outstanding buy-to-let mortgages is lower still, at just 24,800, and there is evidence that some investors are shedding stock.

However, irrespective of the support provided by the Bank of Mum and Dad and Help to Buy, little has changed for the deposit-constrained first-time buyer and the demand for rental stock will continue to grow.

Savills identifies Birmingham, Manchester and the overall Northwest as the top places for buy-to-let investors, with the highest comparative returns. They predict a 4.5% average annual return for Birmingham and Manchester, and 4.1% for the Northwest.

Nett rental yields in 2017 once mortgage costs are taken into account (Source: Private Finance)

Comparatively, mortgage brokers Private Finance place Liverpool at the top for nett rental yields in 2017 once mortgage costs are taken into account, at a whopping 8%. Manchester here is in fourth place at 4.3%.

With lower supply, and increasing demand as house prices continue to be out of reach for the majority of first-time buyers, the buy-to-let market remains lucrative for investors.

We see the property market as a whole on recovery from Brexit in 2018, and investors can get the best returns from investments in the regional markets.

Article by Ian Choong

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and commercial property including student accommodation and carehomes, in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). 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 and due diligence. 

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

Australia Property Outlook 2018

Subdued, Yet Still Robust

It has been said that housing is, by far, one of Australia’s largest assets and the foundation of its household wealth, financial system and economy. Little wonder, that: as of Dec 2017, the total value of the nation’s 10 million residential dwellings stands at $6.8 trillion according to latest official estimates by the Australian Bureau of Statistics (ABS).

Over the last 5 years, house prices in Sydney and Melbourne — two of Australia’s biggest property markets — had increased 75% and 59%, respectively.

Just 3 months ago (Oct 2017), a report by the Swiss-based Bank of International Settlements (BIS) pegged Australia as having the 6th highest rise in annual property prices in the world over the last 5 decades, with house prices surging 6556% since the 1960s at an average increase of 8.1% per year.

Be that as it may, Australia’s housing market saw substantial moderation in 2017 (particularly the second half) led largely by Sydney, and, to a lesser extent, Melbourne, due to stricter lending measures which have affected investor appetite. What, then, would the outlook be like in 2018?

The Bank of International Settlements (BIS) pegged Australia as having the 6th highest rise in annual property prices in the world over the last 5 decades, with house prices surging 6556% since the 1960s at an average increase of 8.1% per year. Image credit: http://bit.ly/2ri0BEl

The property market will continue to see growth in 2018, albeit at fairly modest levels as tightened regulatory and lending criteria for investors remain in place. The moderation of house values across Australia will be driven by Sydney, which had already begun experiencing a drop in price levels in Nov 2017.

Yes, it does appear that the Sydney boom is over, but while we agree with the common perception that prices in Sydney may fall in 2018, we don’t think the prices will drop drastically within the year.

In Melbourne, price growth will also ease though not at Sydney’s rates, given that property is more affordable. Speculators are pulling back but serious investors know that the city is backed by strong population growth. Again, in both cities, we don’t see anything that suggests widespread declines in prices.

Perth will be a city to watch as we think the housing market has finally reached its bottom. Market experts predict that Perth property prices will be flat in 2018, but that interest levels and, consequently, demand will eventually pick up. A recent ANZ-Property Council Survey reveals that confidence levels in Western Australia are rising to similar levels seen in Australia’s eastern states.

Experts are also predicting modest growth to continue in Adelaide and Brisbane, slowing at more moderate levels in Canberra. Hobart, Australia’s stand-out performer last year, will continue to have strong growth levels, albeit slower than its double-digit surge in 2017.

The value of the property market next year will depend largely on whether the Bank of Australia (RBA) will increase interest rates, or if there will be further tightening on lending criteria. That said, it looks unlikely that interest rates will budge from the 1.5% level that it is at currently.

SILVER LINING

Australia’s housing market has remained vibrant due to active investor activity and strong population growth.

The latest Foreign Investment Review Board (FIRB) Annual Report 2015-2016 found that residential real estate applications had increased by 19% to to $72.4bn in 2015-2016 compared to $60.8bn in the previous year. The total number of applications approved for residential real estate had also jumped from 36,841 to 40,149 during this period. It is interesting to note that residential property approvals comprised 96.9% of all foreign investment approvals.

FIRB’s largest residential approvals were in Victoria (44%), followed by New South Wales (32%), Queensland (17%) and Western Australia (4%). Image & source credit: FIRB

The largest residential approvals were in Victoria (44%), followed by New South Wales (32%), Queensland (17%) and Western Australia (4%). Meanwhile, the top 10 countries that dominate real estate in Australia include China (highest at $31.9m), US, Singapore, Malaysia and Japan.

It must be noted that Chinese investments has levelled off over the past year due to tightened investment regulations in China. Charles Pittar, CEO of international property site, Juwai.com, said, “Over the past year we have seen growth in Chinese investment level off, from 90% growth in Chinese buyer enquiries via Juwai.com in 2015 to 28% in 2016.”

 

STRONG POPULATION GROWTH

Tightened regulations will continue to moderate investor sentiment, but not too substantially, as the housing market remains underpinned by strong population growth. This will translate to increased demand for housing.

The latest report by the Australian Bureau of Statistics (ABS) shows that Australia’s population grew by 388,100 people with Victoria being the fastest-growing state or territory, with a population increase of 2.3%.

The latest report by the Australian Bureau of Statistics (ABS) shows that Australia’s population grew by 388,100 people and Nett Overseas Migration at a 27% increase.  Victoria charted the highest population increase in Australia. Source & image credit: Australian Bureau of Statistics

Nett overseas migration (NOM) was recorded at 245,400 in 2017 — an increase of 27% from the previous 12 months. New South Wales (NSW) was the most popular destination with NOM of 98,600 followed by Victoria with 86,900, Queensland (31,100) and Western Australia (13,100).

“NOM in NSW and Victoria increased by 31% and 23%, respectively. This growth has seen both states surpass their previous recorded high in 2008-09,” said ABS Demography Director Beidar Cho.

 

CONTINUED INVESTMENT POTENTIAL

Despite the cooling in price growths in the mainstream markets, Australia will continue to attract migrants, says Virata Thaivasigamony of CSI Prop.

“There is a strong desire to live in Australia, and this will cause demand for property to increase,” he says. “Naturally, investors will question whether property will remain a good investment, but it is the strategic investors who will view property with a long term outlook. This period of slower growth is a buying opportunity for long term appreciation.”

Movements in some of the main cities in Australia projected from 2017 – 2020. Image source & credit: QBE Housing Outlook 2017-2020

For whatever it’s worth, the current ANZ-Property Council of Australia Confidence Index (March quarter) came in at 137.7 in their latest survey, just below the all-time high of 139.5 in the final quarter of 2017. That’s a lot of confidence in the market!

Article by Vivienne Pal

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and commercial property including student accommodation and carehomes, in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). 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 and due diligence. 

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