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Malaysian Property Market to Decline in 2018

Despite positive economic growth, the year 2017 saw Malaysia struggling to shrug off a severely weakened currency, international infamy due to the 1MDB scandal, and a declining property market.

While the ringgit has rallied, bursting through the start of 2018 at a high, the outlook continues to look bleak for the local property sector.

The Malaysian Reserve reports that high- and low-end properties are not expected to see any immediate rebound as affordability, excess stock, and economic and political concerns cast a dark shadow on what was once a vibrant sector.

That there is a glut in the market is now a clear understatement. Data by the National Property Information Centre (Napic) revealed that there were 130,690 unsold residential properties in the country during the first quarter of 2017 — the highest in 10 years!

The total unsold units in Napic’s findings include overhang (completed, but unsold) units, unsold under construction units, as well as SoHo (small office/home office) units and serviced apartments.

Data by the National Property Information Centre (Napic) revealed that there were 130,690 unsold residential properties in the country during the first quarter of 2017 — the highest in 10 years! Source: Napic; Image credit: http://bit.ly/2CtnTIm

83% of the unsold units constitutes the above-RM250,000 category and 61% of the total unsold units comprise high-rise properties, of which 89% were priced above RM250,000. The value of unsold and unutilised properties comes to an estimated RM35.5 billion.

And, with the impending general elections, consumers are exercising more caution in big-ticket long-term purchases.

Affin Hwang Investment Bank Bhd analyst Loong Chee Wei told The Malaysian Reserve that the property market is far from seeing any recovery due to the rising cost of living and the disconnect between society’s income and affordability level.

Local property investors looking to gain from property appreciation and hefty returns from the sale of properties, need to manage expectations as this year looks to be a buyers market (and a renters market). Property sales will not be as attractive as it used to be.

More’s the pity, then, given the rosy Malaysian economic outlook for 2018 and the steady ringgit growth. Public Investment Bank Bhd’s research arm reports that Malaysia is slated to become the second fastest growing economy in Asean.

Total unsold residential properties by state in Malaysia as of 1Q 2017. Source: Napic; Image credit: Data by the National Property Information Centre (Napic) revealed that there were 130,690 unsold residential properties in the country during the first quarter of 2017 — the highest in 10 years! Source: Napic; Image credit: http://bit.ly/2CtnTIm

With the local property market at an uncertainty, some investors bide their time and jump at the opportunity to invest when the price is right (e.g. offered at fire sale prices), and then hold until the property market cycle goes into an upward trend, before they sell for a profit. 

Others diversify their investments into high-yielding, growing markets overseas, such as Australia and the UK, where the currency is stronger, hence rental returns and appreciation are at a higher value than the ringgit. 

Unlike Malaysia, these countries are facing critical undersupply in housing  due to population growth as a result of migration, jobs creation and educational opportunities.

“The UK and Australia have strong growth potential. The population and its demand for housing have grown faster than supply, causing property prices to keep appreciating. It is also because of this, that there is a strong rental market,” says property expert Virata Thaivasigamony of CSI Prop.

“With the current and forecasted performance of the ringgit, alongside the weakened pound and Australian dollar, investors now have the opportunity to invest from a position of strength. Diversifying investments is key to hedging against uncertainties both locally and globally.”

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

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Melbourne’s New Metro Tunnel Boosts Housing Demand

The Metro Tunnel, Melbourne’s state-of-the-art underground project is set to boost efficiency and ease congestion in the city’s transport system, while boosting property prices within the vicinity of its stations. 

Good news for Melbourne dwellers: the $11 billion Metro Tunnel project in Melbourne will start construction next year.

Due for completion in 2026, the twin nine-kilometre tunnels will deliver a new dedicated pathway through the heart of the city. This will free up Melbourne’s biggest bottleneck by running three of the busiest train lines through the tunnel, creating space for more trains to run more often across Melbourne’s rail network. Those three lines are each among the worst in Melbourne for peak-hour overcrowding, with multiple trains per day that breach Public Transport Victoria’s load standard of 900 passengers per train.

The Metro Tunnel is the first step towards a ‘metro style’ rail network for Melbourne with ‘turn-up-and-go’ train services that are the hallmark of the world’s great cities such as London, New York, Hong Kong and Singapore. Currently, commuters using Melbourne’s rail network have to rely on a timetable detailing what time trains will arrive, and plan their journeys around that.

Premier Daniel Andrews says commuters will be able to throw away the timetable after the Metro Tunnel project is complete.

“This project is all about turn-up-and-go, no-timetable-required public transport,” he told reporters in Melbourne.

The new train tunnel will rival the underground networks of Paris and Hong Kong, with state-of-the-art signalling technology that can run trains every three minutes.

The Metro Tunnel will create a new end-to-end rail line from Sunbury in the west to Cranbourne/Pakenham in the south-east, with high capacity trains and five new underground stations located at Arden, Parkville, the CBD and Domain.

The five new underground stations are at North Melbourne, Parkville, State Library at the northern end of Swanston Street, Town Hall at the southern end of Swanston Street, and Anzac on St Kilda Road.

The two stations under Swanston Street will be directly connected to the City Loop at Melbourne Central and Flinders Street stations.

By creating a new dedicated pathway through the inner core for Sunbury, Cranbourne and Pakenham services, more trains will be able to run more often on five other lines across the metropolitan rail network. The Craigieburn, Upfield, Frankston, Sandringham and Werribee lines will all benefit from this unlocked capacity.

As a result, capacity will be created on the network to enable 39,000 more passengers to use the rail system during each peak period. This will mean a less crowded and more reliable train network. More trains also means fewer cars on the roads, helping to tackle congestion in the suburbs.

The construction and operation of the Metro Tunnel is expected to create about 7000 jobs, and increase Victoria’s Gross State Product by at least $7 billion. It will go a long way towards maintaining Melbourne’s status as one of the world’s most liveable cities. This is expected to support the price growth of property in the area, benefiting property investors in Melbourne.

By Ian Choong

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

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UK Government Continues Focus on Northern Powerhouse

The recent Autumn Budget clearly demonstrates the importance that the UK Government has placed in the Northern Powerhouse as the country’s emerging economic juggernaut. Allocations have been made into the transport and digital tech sectors, giving the northern economy a huge boost in jobs creation and population. Read on to find out why investments into the Northern Powerhouse makes sense.

The UK Government continues its momentum of rebalancing the country’s development focus, reducing its concentration in London and pushing it up towards the North. The importance of investing in the Northern Powerhouse to drive economic growth, has been recognised in the Chancellor’s recent Autumn Budget, with increased funding announced for infrastructure across the North.

The Northern Powerhouse, an initiative by David Cameron’s government, was established to boost economic growth in the North of England, particularly in what is termed as the “Core Cities”, namely Manchester, Liverpool, Leeds, Sheffield, Hull and Newcastle. Its aim is to reposition the British economy, shifting the traditional focus from London and the South East, to the North.

In the Budget, Chancellor Philip Hammond promised a £1.7bn Transforming Cities Fund to improve transport links between suburbs and cities outside of London. Half this amount will go to the six combined authorities with elected metro mayors, including £243m for Greater Manchester and £134m for the Liverpool City Region. The other half will go to the other cities by way of bidding.

The fund is designed to address weaknesses in city transport systems in order to spread prosperity by improving connectivity, reducing congestion and introducing new mobility services and technology. In practice, it will mean spending on improving buses, trams, cycle lanes and other initiatives in the regions.

In the Budget, Chancellor Philip Hammond promised a £1.7bn Transforming Cities Fund to improve transport links between suburbs and cities outside of London. Half this amount will go to the six combined authorities with elected metro mayors, including £243m for Greater Manchester and £134m for the Liverpool City Region. Image credit: HM Government

Transport links are important to drive the regional economy, allowing growing businesses to tap into the local workforce. As the economy develops and cities expand, demand for housing will grow with the population increase it brings. This makes property a favourable investment to make, especially in the light of the severe shortage of housing in the UK.

Additionally, the fund will allow links between the new High Speed 2 (HS2) stations and local transport networks, complementing its development in improving movement throughout the regions.  The HS2 is a planned high-speed railway in the United Kingdom which is poised to be the new backbone of the national rail network, linking London, Birmingham, the East Midlands, Leeds and Manchester.

A sum of £300m will go towards ensuring that the HS2’s infrastructure can accommodate future Northern Powerhouse Rail and Midlands Connect services. This would enable faster services between the Northern cities of Liverpool and Manchester, Sheffield, Leeds and York, as well as towards the East Midlands and London.

Chris Grayling, the Secretary of State for Transport said: “Investment in transport is crucial to a strong and resilient economy. The Transforming Cities Fund will drive productivity and growth in cities where this is most needed, connecting communities and making it quicker and easier for people to get around.

“We have already seen the impact of better integrated transport links for both passengers and the local economy in cities like Nottingham and Manchester. This new fund will enable more English cities to reap these benefits, helping to deliver the opportunities and ambition of the Industrial Strategy across the country, as well as driving forward the Northern Powerhouse and Midlands Engine.”

The Industrial Strategy is Prime Minister Theresa May’s road-map for boosting productivity growth and encouraging investment in the UK, to help deliver a “stronger economy and a fairer society”. On the other hand, the Midlands Engine is the initiative to drive economic growth in the Midlands regions, in cities like Birmingham, Stoke-on-Trent and Nottingham — the Midlands’ equivalent to the Northern Powerhouse.

The Chancellor also announced additional funding for development projects in the North, targeted towards the business, technology, research and development sectors, building upon work done previously.

The Tech City scheme will be expanded nationwide, and is set to receive £21m in funding over the next four years. Tech City was started in London in 2011 to accelerate the growth of the UK digital tech sector, through a series of programmes, research and events.

Since its launch, the scheme has helped the digital tech start-up and scale-up sectors become the UK’s fastest growing industry. The UK tech sector had a turnover of £170 billion in 2015, an increase of 22% in five years. More than 1.7 million people now work in the digital tech sector and jobs are being created at twice the rate of other sectors in the economy, 85,000 of which were created from the past year alone!

The digital tech sector is one of the UK’s economic success stories, growing twice as fast as the wider economy and creating highly skilled workers and well-paid jobs. Image credit: www.techcityuk.com

In line with its new focus, this scheme is renamed to Tech Nation, and aims to bring jobs, skills and higher productivity to the regions. Leeds and Sheffield will become home to a Tech Hub, which will support businesses and enable skills in the area to thrive and prosper.

Hammond said, “A new tech business is founded in Britain every hour. And I want that to be every half hour.”

The Chancellor also extended the National Productivity Investment Fund for a further year, expanding it to more than £31bn. The fund was a £23bn fiscal stimulus introduced by Hammond in 2016, to tackle the UK’s poor productivity and lower growth forecasts resulting from Brexit.

A further £2.3bn is being allocated for investment in research and development, while £500m of investment will go into a range of technological initiatives ranging from artificial intelligence (AI) to 5G and full fibre broadband.

Lee Dentith, CEO and founder of the Now HealthCare Group, added: “This is a good start and will work towards ensuring the UK stays at the forefront of technological innovation. AI is vital in transforming the health of our nation and R&D investment from PhD student level onwards will help us and other digital health businesses develop pioneering solutions to tackle health problems.”

In furthering devolution for the regions, the Chancellor also announced a new deal for the North of Tyne region, a new combined authority comprising the Newcastle, Northumberland and North Tyneside councils. Devolution is about giving more governmental powers to the local authorities for regional self-government. A mayor will be elected for the combined authority of North of Tyne and he or she will be able to exercise these devolved powers. The North of Tyne will elect their mayor in May 2019.

The focus of this devolution deal is to create “more and better” jobs in the Northeast. Initial analysis finding 10,000 jobs could be created, 25% of which would be south of the Tyne. £337m will go towards the Tyne & Wear Metro, which is vital funding for it to replace its ageing trains.

In the aftermath of Brexit, the UK is mobilizing its economy in a massive push towards economic development, with emphasis on building the regions. For investors this will mean a strong outlook for the property market in the UK outside of London, and new regional property developments are particularly attractive investments.

By Ian Choong

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

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Care Homes Investment – A Stand Out Asset Class

Part 2 of the Care Homes Article Series. Read Part 1: The Ageing Population in UK here.

The UK care homes market faces an imminent crisis due to a national shortage, creating increasing opportunities for investors and generating a truly global appetite for the sector. The sector has been named the stand out asset class of the year by Knight Frank.

Statistics show that old age is closely linked to debilitating illnesses such as dementia and Alzheimer’s Disease, causing an increase in the need for care homes and assisted living. The UK has a growing ageing population, with new  research by the ONS revealing that 1 in 4 people will be aged 65 years old in less than 30 years.

Of this population, there are approximately  850,000 people with dementia. With better diagnosis and rising life expectancy rates, numbers could exceed 1 million by 2025 and reach 2 million by 2051, when 1 in 3 people over 65 years will have the disease. Today, dementia is the leading cause of death in England and Wales, replacing heart disease.

What is now a grave concern is the inadequate supply of proper care homes and facilities to cater to the increasing number of aged citizens, particularly those afflicted with dementia.

National Crisis: Critical Shortage of Care Homes

Currently, only about 416,000 people live in care homes (Laing and Buisson Survey 2016) in the UK. This constitutes only a meagre 4% of the population aged 65 years and over, and 16% of those aged 85 and above.

Clearly, the UK care homes sector is facing a national crisis — an issue that Knight Frank’s UK Healthcare Development Opportunities 2017 report attributes to a nett loss in homes and beds. This is a trend that is likely to continue for awhile. 

A survey of UK local authorities by the Family and Childcare Trust confirms this:  4 in 5 UK local authorities have insufficient care for older people, particularly those with dementia. And only ⅓ of councils had enough nursing homes with specialist dementia support.

Research by charity outfit, Independent Age revealed that overall, a quarter of homes were rated as either inadequate or requiring improvement in January this year with the worst region being the Northwest (this includes Stockport, Salford and Manchester). Which is why there is an increasing need for properly built, fully-functional care homes that cater to the varied needs of the aged and infirm. 

Research by charity outfit, Independent Age revealed that overall, a quarter of homes were rated as either inadequate or requiring improvement in January this year with the worst region being the Northwest (this includes Stockport, Salford and Manchester). Which is why there is an increasing need for properly built, fully-functional care homes. Image credit: http://bit.ly/2ouQfOj

The Economist published an article revealing fundamental and systemic flaws, explaining that the care home market has not responded to demand, and, even when built, are often not located in the right places.

‘It is hard to get an old-people’s home built. Local authorities are not always willing to grant planning permission, especially when a plot could be used more lucratively, such as for shops,’ the article states.

The fact is, dedicated care is very costly. And, understandably, social care provided by councils is quite tightly rationed, as local authorities can only provide help to those with very high needs. Currently, only those with low means — under £23,250 in savings and, in some cases, the value of a home — get help towards their costs. The rest have to pay all their care costs, which could exceed £100,000. 

Julian Evans, Knight Frank’s Head of Healthcare said that the UK care homes market faces an imminent crisis due to a national shortage of beds. However, this crisis and acute undersupply of care homes has created opportunities for investors, and will continue to drive investor appetite in the coming years.

“The disparity of care bed supply and demand presents increasing opportunities for investors, and, combined with the fall in the sterling, has generated a truly global appetite for the sector.

“The care home sector is likely to be the stand out asset class of 2017, particularly for those investors wishing to diversify their asset portfolios in the current uncertain economic climate,” he explained.

Stand-Out Commercial Property Class

Just like residential property and student property in the UK, the law of economics applies to UK care homes investment — with low supply and high demand, as well as the average cost of ₤574 per week at a care home facility, returns are pretty impressive. 

Some projects offer up to 8% nett yield (after all expenses) for up to 25 years, as well as an exit clause. For many investors, the exit clause is part of the investment attraction.

Some of the care homes investment projects in our portfolio offers an exit/guaranteed buyback at years 10, 15, 20 and 25.

“Indeed, retirement living has fundamentals for growth, and makes a great investment opportunity. With the ageing population thrown in to the equation, care homes investment could be the next student investment,” said CSI Prop spokesperson Virata Thaivasigamony.

For information on care homes investment, contact us at 016-228 8691 or 016-228 9150.

By Vivienne Pal

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

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UK Landlord Licensing

The Landlord Licensing scheme has recently taken effect in several cities and boroughs in the United Kingdom.

The scheme, which is also known as selective licensing, sets out to ensure that landlords are “fit or proper persons”, and that the buildings being let out are fit for occupation. If someone cannot meet the ‘fit and proper’ landlord criteria the scheme sets out, they will be refused a licence.

Despite having been introduced in certain areas recently, it is not new, and was provided for by the UK Housing Act 2004. Nonetheless, enforcement of Landlord Licensing is still in its infancy. Several city councils, for example, Bradford, Luton, Stoke & York have yet to implement the scheme (as at time of publication), whilst Liverpool and Manchester enforced the scheme in 2016 and 2017, respectively.

Selective licensing really is an attempt to improve the rental market by raising standards and helping to identify non-compliant landlords and management agents who do not invest in their properties or manage them properly.

Areas are designated for selective licensing upon the discretion of the local council. Often a scheme will only cover certain wards or areas of a city, and under new rules only 20% of a council’s area can be selectively licensed without a special application being made.

A scheme lasts for five years and can be renewed if the local council deems it necessary.

Right now Liverpool is running the scheme citywide, while Manchester has introduced licensing in only some parts of the Crumpsall, Moss Side and Rusholme areas.

Landlords in London can use the London Property Licensing website to find out whether they are in an area covered by a scheme, but there is no countrywide list of schemes. Checking with the local council is the safest strategy.

Where selective licensing applies, then normally all houses within the private rented sector for that area must be licensed, except where they require to be licensed as HMOs (houses in multiple occupation). Licensable HMO properties are properties with three or more storeys, and are occupied by five or more tenants not from a single household. Non-licensable HMOs must be licensed under selective licensing.

Some properties are exempt from selective licensing. These include:

  • Holiday lets
  • Business premises
  • Student premises where the university is the landlord/manager
  • Premises where the tenant is a family member

Each local council sets their own licence fees and discounts, and the licences last until the end of the 5-year period. In Manchester the licence costs £650, with each additional licence costing £550. Liverpool charges a fee of £400 for the first, with each subsequent licence costing £350.

In Liverpool, properties managed by professional managers who are members of one of the council’s approved co-regulation organisations (e.g. the Association of Residential Lettings) are entitled to a 50% discounted fee. This means that investors of property developments like Queensland Place and Parliament Place need only pay £200 for the licence.

If the property consists of en-suite units in a cluster sharing a common living area, only a single licence is required for the whole cluster. Student accommodation is a good example of this. This means that cost of one licence can be divided amongst the individual units, greatly reducing the price of licensing.

This is good news for investors in student accommodation. The more units one cluster has, the greater the division, and the lower the cost of licensing. However, studio apartments with no common living area will require a single licence for each individual apartment.

The local councils are taking this very seriously. In October last year, a landlord in Liverpool was fined £1,500 due to his failure to obtain a licence.

“The punishments can be very high,” says Richard Tacagni, founder and managing director of property consultancy London Property Licensing. “Landlords can be forced to pay 12 months’ rent back to a tenant, or could be told that they are unable to rent out a property in future.”

Article by Ian Choong

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

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UK Bank Raises Interest Rates

Experts and industry players are clear that the increase in interest rates will not have too adverse an effect on the property market. In fact, the UK’s property market will take the rise in its stride, according to ratings agency Moody’s.

The official bank rate in the UK has been lifted from 0.25% to 0.5%, the first increase since July 2007. The move reverses the cut in August of last year, which was made in the wake of the vote to leave the European Union.

Even with the increase, interest rates still remain at historic lows. To lend some perspective, Malaysia’s interest rates are at a high 3%, while the interest rates for Australia and Singapore are at 1.5% and 1.1%, respectively.

Higher interest rates increase the cost of borrowing money, which moderates economic growth and brings inflation under control.The panel which sets interest rates, called the Monetary Policy Committee (MPC), has justified the rate increase by pointing to record-low unemployment, rising inflation and stronger global economic growth.

 

In contract, Malaysia’s interest rates are at a far higher 3% compared to UK’s 0.5%. Image credit: Trading Economics

Bank of England governor Mark Carney stated that the UK economy is expected to grow at about 1.7% for the next few years. He said this would require “about two more interest rate increases over the next three years”, taking the official rate to 1%.

The Bank of England (BOE) has been reluctant to raise interest rates until now, arguing that inflation had been boosted by the fall in the value of the pound since the Brexit vote in June of last year. OBR predicts inflation will peak at 3% this quarter before falling back towards its 2% target over the next year.

Expectedly, the increase in interest rates will cause knock-on effects in the UK property market. Homeowners on variable rate mortgages, whether it is a standard variable rate or a tracker rate, will be most affected. However, homeowners whose mortgages are on a fixed rate will not be affected by the rate hike until  they remortgage their property.

Higher mortgage payments caused by rising rates can put less households in reach of a mortgage (loan). The lower competition can reduce demand for property which will in turn slow down property price growth. Correspondingly, the market for rental properties will increase as people who might have bought a house can now only afford to rent. This, from the investor perspective, is a good thing.

Experts and industry players are clear that the increase in interest rates will not have too adverse an effect on the property market. In fact, the UK’s property market will take the rise in its stride, according to ratings agency Moody’s.

Moody’s economist Colin Ellis said, “We have expected a rate rise for some time. This is about taking away emergency stimulus introduced after the referendum vote. A rise of 25 basis points [0.25%] is not going to move the dial. A rise of 0.25% pales into insignificance compared to the 8%-10% decline in the currency.”

Surveys from major mortgage lenders Halifax and Nationwide have painted a buoyant picture of the housing market. Halifax reported that house prices in the UK were rising at their fastest annual pace since February, up 4.5% to a record £225,826. Nationwide’s house price index also showed prices picking up in October, to an annual rate of 2.5%, the highest reading recorded in three months.

Savills predicts the housing market will grow by 14% from 2018 to 2022 based on an assumed Bank base rate of 2.25% by 2022. The north-west of England is set to experience the fastest price growth in the UK over the next five years: a surge of 18.1%.

Savills also forecast that rents are set to grow faster than house prices in London for the first time since 2011. They are forecast to rise 17% over the next five years, despite a 3% fall this year.

Virata Thaivasigamony of property consultancy CSI Prope commented, “The interest rates are now still very low, so it’s a good time to get into property. The fact that the UK is increasing interest rates at this time is a great statement of confidence in its economy, that Brexit is no longer a cause for concern.

“The UK has had a housing crisis over the past few years, and the increase in interest rates isn’t going to change the basic fact that people still need homes — which are a basic necessity. If people can’t afford to mortgage, they will have to rent. You’ll see rental income potentially going up, as demand for housing continues its upward trend.”

Interest rates remaining near historic lows bodes well for buyers, and today’s market still reflects some of the cheapest debt a property buyer will be able to attain in the market.

Article by Ian Choong

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

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Property Investors Benefit from UK Stamp Duty Cut

The abolishment of the stamp duty for property up to £300,000 in the recently announced UK Budget will largely benefit first-time house buyers as well as investors/ current owners.

The UK Budget, announced just a few days ago, was billed the ‘Housing Budget’, with housing placed at the heart of the British government’s spending plans.

Chancellor Philip Hammond announced that more money will be poured into housing over the next five years to ensure that land is available, that homes, including affordable homes, and supporting infrastructure will be built where needed.

But the real headline-grabber was the abolishment of the Stamp Duty and Land Tax for first-time buyers, which is effective immediately.

Stamp duty and land tax is a lump sum payment imposed on purchases of property or land over £125,000. The tax rate varies depending on the value of the property.

The new Budget stipulates that stamp duty will not be imposed on purchases of property priced up to £300,000 outside London.  Meanwhile, in high priced areas like London, exemptions will be availablle on the first £300,000 of the purchase price of properties up to £500,000.

The Chancellor said that this is effectively a stamp duty cut for 95% of first time buyers and that going forward 80% of first time buyers will not pay the tax.

The changes in stamp duty announced in the UK Budget on 22 November, is effective immediately and will not just benefit first-time buyers, but also current property owners/investors. Image credit: http://bit.ly/2BkH1Is

The Chancellor introduced the policy after it was revealed that the number of people under 45 who own their own home has fallen by 20% since the Tories took power seven years ago.

While the new policy will largely benefit first-time house buyers, investors will benefit, too, as demand will push up property prices, which, together with the inherent lack of supply, will continue to drive people to rent. This will keep the rental market strong.

“The abolishment of stamp duty for property under £300,000 will fuel a spike in the prices of homes within this range due to increased demand and a rush to buy currently available property within this price range,” says CSI Prop spokesperson Virata Thaivasigamony.

“It’s a double-edged sword and boils down to housing availability. The reality is that there is a housing undersupply in the UK with little likelihood that supply will increase in such a short period,” he adds, alluding to the Chancellor’s pledge to increase construction of new homes to 300,000 a year on average by the mid-2020s (up from 217,000 last year).

The secretary of state responsible for housing, Sajid Javid, has said that up to 300,000 additional homes must be built in England annually, up from about 150,000 in 2015 and a little more than 220,000 over the past year. Some industry players say this looks increasingly unlikely given the significant national deficit and ongoing debates over green belt construction.

The Office for Budget Responsibility said that the tax break could push property prices up by approximately 0.3%, with most of the increase coming in 2018. It also said that it is the current property owners who would be the main gainers of the new policy.

HMRC has also confirmed in a statement that while the new stamp duty policy reduces the upfront cost of buying a home for first time buyers, it is also expected to lead to an increase in house prices in the first year after implementation.

Meanwhile, with the increase in prices and undersupply in housing comes a continued demand for the private rented sector. The Property Wire quotes Andrew Turner, chief executive of brokerage Commercial Trust Limited, as saying that there could be a higher demand for private sector homes in Birmingham, Manchester and Liverpool where landlords are already enjoying higher yields than in London.

The Royal Institute of Chartered Surveyors (RICS) has predicted that 1.8 million more households would be looking to rent by 2025 as a result of increasingly unaffordable homes.

Dorian Gonsalves, chief executive officer of franchise lettings agency Belvoir, pointed out that demand for rental properties is set to remain high. 

He pointed out that many young people are actively choosing to rent rather than to become first time buyers and that is not necessarily going to change.

‘The reasons for renting are numerous, and many young people simply do not want the commitment of a 25 year loan,’ said Gonsalves.

What was rather unexpected in the Autumn Budget was the announcement that capital gains tax (CGT) will be imposed on all real estate types, to be effective likely by April 2019. Currently, CGT is only imposed on residential property.

This, however, is unlikely to affect investor appetite much, as many other jurisdictions already impose CGT on foreign property investors. Additionally, the robustness, transparency and resilience of the UK property market — on top of the weakened pound — continue to remain top criteria for foreign investors.

The Autumn Budget has also given local councils the authority to double taxes on empty properties. Under the new rules, local councils can charge up to an extra 100% of council tax if a home has been empty for two years or more, up from the current 50%.

Looking for projects below the £300,000 and  £500,000 (London) range? Contact us at 03-2162 2260.

Article by Vivienne Pal

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

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The Ageing Population in UK

The UK population is growing — and ageing — as births continue to outnumber deaths, and immigration continues to outgrow emigration.

According to latest figures by the Office of National Statistics (ONS), the UK’s population in 2016 was at its largest ever at 65.6 million, and is projected to reach over 74 million by 2039.

This projection by the ONS which shows the distribution of the UK population from 1976 – 2046 depicts an ageing  society in the UK that is growing. Image credit: http://bit.ly/2uuMcka

But as the population expands, so does the number of the elderly and infirmed. The old age dependency ratio (OADR) in 2016 was at 285. This means that there were 285 people aged 65 and over for every 1,000 people aged 16 to 64 years (i.e. the traditional working age). Of these figures, 18% are aged 65 and over, and 2.4% are aged 85 and over.  These figures have been increasing since 1996 and is expected to rise further, with 157 local authorities looking at an OADR of above 500 by 2036 compared to only 11 local authorities in 2016.

West Somerset is projected to have an OADR of 928 by 2036 — almost matching the number of those aged 16 to 64 years!

To lend more perspective, only a handful of areas in the UK had over 25% of their local population aged 65 and over in 1996. But by 2036, more than half of the local authorities in the UK are projected to have 25% or more of their local population aged 65 and over. ONS predicts that the number of those aged 65 and over will grow to nearly a quarter of the population by 2046.

The number of those aged 85 and over is also growing. In mid-2016 there were 1.6 million people aged 85 and over, and by mid-2041 this is projected to double to 3.2 million.

Conversely, the proportion of children in the UK population has declined from over 24.5% in 1976 to 18.9% in 2016. This proportion is projected to decline even further in future years.

Projection by the ONS on the population growth by 2041 to reach another 7.3 million by 2041. Image credit: http://bit.ly/2znUvFv

Interestingly enough, centenarians are the fastest-growing age group in the UK, with the number of 100-year-olds almost doubling from 7,750 in 2002 to 14,910 in 2016 (note: there were only 3,642 centenarians in 1986!).

The number of people aged 90 and over in the UK reached 571,245 in 2016 — its highest ever.

ONS predicts 46% of growth in the next decade will be from more births  than death.

Underlying improved mortality rates over the last few decades is the steady increase in life expectancy. Life expectancy at birth for females is projected to be 85.1 years by 2026 and 86.6 years by 2036. Males are also projected to live longer, increasing to 82.1 years by 2026 and 83.7 years by 2036.

Inadequate Care Facilities for the Elderly

However, with the increase in OADR across the UK comes an increased demand for professional care facilities to cater to the higher number of elderly and infirmed.

New research has revealed that 1 in 4 women and 1 in 6 men aged 65 and over will be physically impaired by 2047, and their disabilities will be sufficiently severe to affect their daily routines.  

Researchers from the Wittgenstein Centre International Institute for Applied Systems Analysis in Austria, wrote: ‘[This] might require several measures to accommodate the needs of an increasing number of people with activity limitations such as expanding infrastructure for disabled people in the public as well as private sectors, training of medical specialists and care professionals.’

The question that now arises is whether there is adequate supply of care homes for the elderly and infirm.

There was more than 570,000 aged 90 and over living the UK. This is the highest number ever in the history of UK’s population. As the population of the aged and infirm inceases, so does the demand for proper care homes and facilities. Image credit: http://bit.ly/2xCM1Xg

Unfortunately, the UK care home sector is facing a national crisis, due to a nett loss in UK care homes and beds. Knight Frank’s UK Healthcare Development Opportunities 2017 report identified a decrease in the number of registrations of both new homes and new beds. Combined with the long-term trend of increased deregistrations, this has caused a nett loss of 166 homes and 2,612 beds across the UK market as at Sept 2016.

The shortage in supply of ade quate care homes and beds is predicted to continue as the UK treads the murky waters of Brexit and other factors.

“The UK care market is facing an imminent crisis as the sector struggles to cope with a national shortage of beds. Our research suggests that if de-registrations continue to exceed the number of new registrations that come to market, approximately 6,000 beds are at risk of closure over the next five years,” said Julian Evans, head of healthcare, Knight Frank.

This crisis and acute undersupply of care homes has now created increasing opportunities for investors, and will continue to drive investor appetite in the coming years.

“But this disparity of care bed supply and demand presents increasing opportunities for investors, and combined with the fall in sterling has generated a truly global appetite for the sector, with the care home sector likely to be the stand out asset class of 2017, particularly for those investors wishing to diversify their asset portfolios in the current uncertain economic climate,” Evans explained.

This marks the first article in the Care Homes series. Next: Care homes- an investment opportunity

By Vivienne Pal


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

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UK Taxes & the Common Reporting Standard – Investor Club

The crowd pay close attention during our Investor Club UK Taxes & Common Reporting Standard Q&A session with the panel of experts.

The recent CSI Prop Investor Club event was a resounding success — a wholesome combination of learning, good food and networking. This instalment of our Investor Club focused on taxes and UK property, and the global and automatic exchange of financial information under the Common Reporting Standard (CRS).

The atmosphere was relaxed and slightly festive, with decor and food lending a nod to the recent Deepavali celebration.

Kierson Hughes, our specially invited guest speaker from Adams & Moore Tax Consultancy Ltd, a UK-based accountancy and tax firm, took our clients through the various property taxes for investors. Kierson has more than 25 years of experience in the industry and, together with her team, has handled a portfolio of over 3,000 clients.

Kierson Hughes highlighted the importance of promptly filing UK tax returns, even if the tax is not applicable to the investor, in order to avoid penalties.

Kierson highlighted two taxes that UK property investors should note: the Stamp Duty Land Tax, which is paid upon purchase of a property, and the Capital Gains Tax, payable upon sale of a property. She also stressed on the importance of promptly filing UK tax returns, even if the tax is not applicable to the investor, in order to avoid penalties.

In the second part of the learning session, guest speakers Fennie Lim and Alvin Yap enlightened clients on the Common Reporting Standard, an international effort involving the automatic sharing of individuals’ financial and tax information among more than 100 member countries/ jurisdictions to combat tax evasion.

Fennie and Alvin speaking about the Common Reporting Standard and international automatic exchange of information.

Fennie is the executive director of Crowe Horwath KL Tax Sdn Bhd, and has 25 years of experience in income tax compliance, tax advisory and indirect tax, as well as tax investigations and field audits.

Alvin, the associate director of Wealth Management at Crowe Horwath KL Tax Sdn Bhd, has more than 20 years experience in personal and corporate risk management, specialising in asset protection, preservation planning and business succession planning.

Reportable accounts under the CRS includes interests earned, dividends, sales proceeds from financial assets and income from certain insurance contracts. Property is among the fixed assets currently not covered by the CRS.  49 jurisdictions have already implemented the CRS this year, with the remaining to follow suit in 2018. Malaysia is among the 53 jurisdictions that will commence its reporting next year. 

In keeping with the festive theme, our team arranged for a sumptuous serving of delicious Indian food to fill the stomachs of our hungry guests.

In keeping with the festive theme, our team arranged for a sumptuous serving of delicious Indian food to fill the stomachs of our hungry guests.

The live thosai station — a  huge hit and a real crowd-pleaser — churned out mouth-watering thosai after thosai, made extra fragrant with generous drizzles of ghee.

The live thosai station — a  huge hit and a real crowd-pleaser — churned out mouth-watering thosai after thosai, made extra fragrant with generous drizzles of ghee. And, to sweeten the deal, each table had a serving of traditional Indian snacks and sweets like acimurruku and rava kesari.

The Kids’ Corner kept the little children busy making colourful sand art and cute clay figurines of their favourite superheroes as parennts listened to the talk.

There’s always something for the kids here at CSI Prop. The little ones were kept busy, making with colourful sand art and making cute clay figurines of their favourite superheroes, whilst their parents listened to the talk.

Mohammed Amiri, a qualified yoga instructor tell us a thing or two about yoga and meditation.

In keeping with our core values of Knowledge and Fun, we ended the evening with Mohammad Amiri, a qualified instructor with the MAYI Yoga Academy and long-time yoga practitioner, who spoke to the crowd about the benefits of yoga and meditation. In his calming, pleasant tone of voice, Mohammad demonstrated how to disconnect from the hustle and bustle of our surroundings and drift into a peaceful state of mind. He also taught us a couple of yoga postures that helped relax and rejuvenate our stiff muscles and tired minds.

The next Investor Club in Dec will be the movie premiere of The Last Jedi. Star Wars fans, stay tuned!

A heads up to our clients: our next Investor Club event will be an exciting one! To be held mid-December, we will be bringing to club members (from a galaxy far, far away) an exclusive screening of The Last Jedi, the latest Star Wars movie at an exclusive and plush cinema in the Klang Valley.

As always, delicious refreshments will be served. Club members may just catch a surprise appearance of a character or two from the movie! We will be sending out details soon via e-mail and whatsapp, so STAY TUNED!

The Investor Club is an extension of the company’s core values of Knowledge, Service and Having Fun; and an effort to make a difference in the lives of clients through the sharing of knowledge, fun activities and networking. Club events are private and membership is extended exclusively to our clients. For more details on the investor club, call 03-2162 2260.

Article by Ian Choong


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

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Manchester, The Original Modern City

For over 250 years, one UK city has built its reputation for creating more than its fair share of world firsts. Guess which city that is?

Manchester is the UK’s original modern city (Image source: Youtube)

For much of the time it existed, Manchester was a manorial township, with peasants working the fields for the Lord of the Manor. It was only during the turn of the 19th century that Manchester underwent a transformation, and grew at an astonishing rate. This expansion and urbanisation was brought on by a boom in textile manufacturing during the Industrial Revolution, and resulted in Manchester becoming the world’s first industrialised city.

Today, Manchester is known as the UK’s second city. With 50% growth in the last 10 years, it is the UK’s fastest-growing city and Europe’s second largest creative tech hub. Around 70,000 people now work in the city’s creative, digital and tech industries and a rich talent pool of over 110,000 thinkers thrive in the four leading universities there.

Many defining achievements in science and technology come from Manchester. It’s where the world’s first IVF baby was conceived, where they split the atom and isolated graphene. It’s also where the world’s first stored programme computer was built. A total of 25 Nobel prize winners have come out of Manchester!

Massive amounts of investments have gone into Manchester as part of the British government’s Northern Powerhouse push. Starting from this year, £1 billion will be spent to transform the Manchester airport, further establishing Manchester as one of the most connected cities in the world. The city already boasts direct connections to many of the world’s major capitals, like New York, Hong Kong, Singapore and Beijing. The new High Speed Rail (HS2) under construction will cut travel time between Manchester and London from the current 2 hours to just over an hour when it is ready, and, in its second phase, also reduce the time required to travel to Birmingham and Leeds.

Manchester’s staggering development makes it an attractive place for investors looking for the next big thing to invest in. Property, in particular, is a solid choice as there is a growing demand for housing in the city. Manchester registered a 7.3% increase in house prices over the past year, topping the list of all cities in the UK. This demand is bound to rise even higher as Manchester’s economy grows, and more and more jobs are needed.

This video captures the essence of Manchester as the original modern city of the UK:

Facts and figures about Manchester:

  • Birthplace of the Industrial Revolution
  • Where the world’s first IVF baby was conceived
  • 25 Nobel prize winners
  • Where they split the atom and isolated graphene
  • Where the world’s first stored program computer was built.
  • Population of 2.7 million people
  • Over 200 languages
  • With 50% growth in the last 10 years, Manchester is the UK’s fastest-growing city and Europe’s second largest creative tech hub
  • Around 70,000 people now work in the city’s creative, digital and tech industries
  • A rich talent pool of over 110,000 thinkers from four leading universities.
  • Between 2015 and 2017, over £1 billion was spent on the city’s infrastructure.
  • Direct flights to many of the world’s cities, e.g. New York, Hong Kong, Singapore, Beijing etc.
  • Called the UK’s second city
  • Global exporters of world-class culture as well as technology; a city united by a passion for sport and music
  • One of the world’s best places to visit in 2015 — the only British city to be given this accolade by the New York Times
  • Home to some of the world’s biggest brands which contribute to Manchester’s £50 billion economy.
Article by Ian Choong

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