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UK Housing and the Brexit Effect

Categories: Reading and Research

The clock is ticking to the deadline for Britain’s forthcoming exit from the European Union on March 29 next year.

Prime Minister Theresa May has been able to negotiate with European leaders a draft agreement for Brexit. But, she now faces the challenge of getting it through Parliament. Not all of Britain is happy with the terms proposed, and some are campaigning for the Prime Minister to push for better terms. However, senior figures in Brussels have expressed that it is unlikely that the UK will get a better deal than the one currently on the table.

Britain’s leaders race against time to determine whether the UK leaves the Union with or without a deal. What does a deal, or no-deal mean for the future of property investment in the UK?

 

Strong fundamentals keep the market afloat

Right after the referendum results came out, many had predicted a downturn in the market with all the uncertainty about Britain’s future. Even so, we held fast to a positive outlook for the market due to the sector’s strong fundamentals. That there will be challenges, we have no doubt, but we remain steadfast in our belief that  the UK will recover. More of that here.

The UK property market reacted adversely to the EU Referendum, but its rebound defied expectations. Data from market analyst Hometrack show that the market had experienced an overall period of growth after the referendum, with the cities of Manchester, Birmingham and Liverpool registering 9.7%, 9.6% and 8.3%, respectively, since March 2017. 

As a whole, the UK gained 5.3% during the same time period, with London’s 0.2% an unsurprising drag on average growth.

What’s worth reiterating is that the UK property market continues to grow despite concerns about Brexit. That, amid the negativity and naysaying that has been circulating around the impending Brexit, is a growing number of experts that understand that the UK housing market is not propped solely by UK’s exit from the European Union.

Real estate firm Colliers International identifies the main drivers of UK residential property as long-term demographic pressure, household formation rates and government housing policy. The firm pointed out that house demand and prices are not so much affected by Brexit as they are by stamp duty, help-to-buy and other domestic policy changes.

David Hollingworth, of brokers L&C, said that any impact from Brexit will be short-lived. “The fundamentals that have driven house price growth remain the same, namely the limited supply of property and low interest rates,” he said.

These two factors are unlikely to change anytime soon.

Industry analyst Ray Boulger, from broker Jon Charcol added that “the vast majority of people move for reasons completely unrelated to Brexit and so transactions won’t fall much.”

 

Property in the capital

London may have experienced a slowdown since the referendum, but property firm JLL expects a bounce-back after Brexit. The firm predicts that the average price of a new-build home in Zones 1 and 2 is expected to jump 17.6% between Brexit and 2023.

Adam Challis, head of residential research at JLL, says that values will nudge up next year before accelerating faster with a greater sense of job security.

“Once we have confirmation of a deal and a reasonable transition period, people will start to feel more confident and this will encourage homeowners and investors to buy again.”

House price growth will also be driven by the escalating supply crisis within the capital. Housing starts are expected remain around 20,000 units a year over the next three years, and begin to rise towards 25,000 a year by 2023. This falls a long way short of the Mayor of London’s target of 66,000 new homes per year.

 

UK’s economy to rebound

Positive economic indicators underpin the optimistic housing outlook. Advisory firm Ernst and Young forecasts an upwards trend for GDP, to grow by 1.4% next year, followed by 1.7% in 2020, 1.8% in 2021 and 2.0% in 2022. Next year, spending power will also start to increase as earnings are expected to rise by as much as 3.0% while inflation is predicted to drop to 2.0%.

Predictions for future earnings and inflation in the UK (Ernst & Young)

Once a deal is set in stone, we should see a partial recovery in the value of the British pound. Colliers predicts a 5% to 10% appreciation in value, affirming that now is the right time to get in to the market while the pound is still weak.

Recovery of the pound will slow inflation and lead to stronger income growth that will support prices. The high-end residential sector will benefit from greater certainty by foreign expats working in London and the preservation of the UK’s financial services sector.

 

A worst-case scenario: Hard Brexit

Even in the event that a deadlock happens and no trade deal is reached, the weakening of the pound will lead to greater interest in the high-end residential sector by overseas investors looking for safe haven investments despite less accommodating tax and regulatory relief.

Mortgage rates could stay low for longer if that happens. Previously the Bank of England cut interest rates to support the economy after the referendum. Mr Hollingworth says that this would mean “an even more prolonged period of low interest rates which should help to maintain affordability for mortgage borrowers.”

There is increasing domestic pressure for tax and regulatory reform to support the housing market given the role that housing and the ‘wealth effect’ plays in supporting household spending – a mainstay of the UK economy.

A new round of housing policies and tax adjustments would be expected after the next general election post-Brexit. In the long run, the economic weakness resulting from a hard Brexit will be compensated by new reforms targeting the housing market in general.

 

Conclusion

The strong fundamentals of the UK property market will prove its resilience to Brexit. In the long term, investors can bank on the market to continue to provide good returns. Weakness in the British pound right now confirms a window of opportunity for investors to get in before the value of sterling starts to rise again.

CSI Prop recommends investment in the regional cities, where rapid expansion and development spurs a strong growth in the property markets.

There is no time to lose — the British pound is weak, which means an amazing buying oppportunity for property investors. Give us a call at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

By Ian Choong
Edited by Vivienne Pal

Sources:

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What Does the UK Budget Have in Store for Property Investors?

Categories: Reading and Research

The UK Autumn Budget proved that despite the government’s latest initiatives in addressing housing affordability for first home buyers, landlords remain pivotal to the supply of housing in the UK.

At a glance, the Autumn Budget (Oct 29) had good news for first-time house buyers in the reduction of stamp duty on jointly-owned property. The relief applies to homes of up to £500,000 and is in addition to the first-time buyer stamp duty exemption announced last year.

The Chancellor also declared that the government would allocate £500m for the Housing Infrastructure Fund to enable a further 650,000 homes to be built. This is on top of the previous pledge of 300,000 homes per year, on average, to raise housing supply by the mid-2020s.

Alongside the newly announced stamp duty relief for first home buyers, this is a laudable measure to alleviate housing unaffordability, yet there remains a lack in optimism where the issue of housing supply is concerned.

Landlords & Private Rental Sector: A Necessity to Solve UK Housing Woes

Historically, the UK has been plagued by a chronic shortage of housing. Not only had the government failed to meet its previous target of building 240,000 homes by 2016 (a target set in 2007), it had also changed Housing Ministers 16 times — more than 20 times faster than the average UK homeowner moves houses!

A research by Heriot-Watt University shows that the undersupply has become even more critical: England alone faces a backlog of 4 million houses.

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

More houses are needed to address homelessness as well as skyrocketing house prices and rents. And this is where the private rental sector comes in. Not only are landlords pivotal in ensuring the supply of rental housing for the growing number of young people unable to afford their own homes, they also provide flexibility for millennials who prefer to rent.

New research has shown that UK property remains a lucrative investment with 88% of landlords able to gain a profit, as the imbalance in supply and demand continue to drive rental prices.

Updated Incentives/Exemptions for Landlords

Investors and landlords can look forward to the following updates moving forward:

(a) PERSONAL ALLOWANCE

Landlords can claim an increased personal allowance amount of £12,500 off their taxes in 2019/20. The personal allowance is currently at £11,850.

(b) CGT ANNUAL EXEMPTION

The Capital Gains Tax (CGT) annual exemption will be increased from £11,700 in 2018/19 to £12,000 in 2019/20.

Potential SDLT surcharge

Some weeks ago, Prime Minister Theresa May announced the possibility of a Stamp Duty Land Tax (SDLT) surcharge of 1% – 3% to be imposed on overseas landlords/ property buyers from Jan 2019.

The government has now revealed that it will propose a surcharge amounting to only 1% during the Budget, and that a consultation on the surcharge will be published in January. Stay tuned as we continue to monitor the news and provide updates in due course.

Interested to invest in UK property and be a landlord? Invest before the foreigner SDLT surcharge kicks in in 2019! Call us and make that smart choice today at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia). Or, email us at info@csiprop.com!

Find out more about Arden Gate, our latest Birmingham residential investment property in the Midlands. Birmingham has been voted one of the UK’s fastest-growing city by PwC. Come meet our developer rep and learn about Birmingham’s bullish property market.

By Lydia Devadas
Edits & additions by Vivienne Pal

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Millennials Loss in Home Ownership A Landlord’s Gain?

Categories: Reading and Research

Home ownership, especially among the young, in the UK has declined significantly compared to a decade ago. As the name suggests, Generation Rent is growing, now more than ever before.

Today, 40% of young adults are unable to afford one of the cheapest homes in their area even with a 10% deposit.

For 25- to 34-year-olds earning between £22,200 and £30,600 per year, home ownership fell to just 27% in 2016 from 65% two decades ago. This is an indication of home ownership collapse over the past 20 years especially among those from the middle-income range.

Back in 2016, data by the Office for National Statistics had highlighted that the number of homeowners in the 22- to 29-year-old age group stood at 37% in 2008 compared to just 27% over the last 10 years. This drop in homeownership among young adults has several contributing factors.

The drop in homeownership among young adults. Image credit: IFS

Disparity in House Price Growth vs Income Growth

Rising house prices relative to income growth has robbed the younger generation of the ability to buy their own home, while the increase in rental rates has made it almost impossible to save for a deposit.

House prices have risen around 7 times faster compared to wages over the last two decades. New research by the Institute for Fiscal Studies (IFS) reveals that since 1997, the average property price has risen by 173% in England after adjusting for inflation, and by 253% in London. Meanwhile, rental cost has risen from an average of £140 a week to £200 a week in England.

The expanding disproportion between income rate and ever-growing house prices is resulting in a severe unaffordability crisis among young adults.

Income versus house price growth Source: IFS, Image Credit: The Sun

According to a report by the Sun, back in 1995/96, 2 in 3 (65%) of 25- to 34-year-olds from the middle-income bracket were homeowners.

But by 2015/16, the number plummeted to just 27% where only 1 out 4 of this group owned their own home.

At the time,  average house prices were a staggering 152% higher than they were 20 years earlier after adjusting for inflation. Meanwhile,  the nett family income of those aged 25-34 increased by only 22% over the same period, causing a relentless imbalance between household incomes and house price growth.

A Preference for Experience-focused Living

Another notable factor is the youngsters’ preference for an experience-focused living.

Millennials prefer living amongst a like-minded community. For many, renting a house enables them to live close to the city centre — which also happens to be where they prefer working — and be part of a community that possesses similar lifestyle practices. This aspect seems to have taken the priority seat compared to being able to buy a house.

Purchasing a property near the city centre is close to impossible due to exorbitant prices, hence, renting becomes the next best option.

An Opportunity for Investment

This drop in home ownership and high demand for rental properties amongst the millennials signifies a huge shift for the UK’s rental and investment sector, offering opportunities for investment returns. In Manchester alone, one of the fastest-growing cities in UK, an estimated 11,000 new jobs are forecasted to increase by 2022, yet only 4,000 new properties in the city centre are expected to be built by then.

The lack of supply in residential properties alongside growing job opportunities increases the demand for rental properties which, reciprocally, opens the gateway for investment. In September 2018, the UK government and Barclays Bank announced a new £1 billion loan fund to drive construction levels in the country’s property sector, with a focus on providing greater numbers of purpose-built rental property in key markets.

The ever-growing rental market promising capital growth and rental income clearly opens an array of investment opportunities for investors looking to spend their money wisely.

By Lydia Devadas 
Edited by Vivienne Pal
  • https://www.ifs.org.uk/uploads/publications/bns/BN224.pdf
  • https://www.ons.gov.uk/peoplepopulationandcommunity/housing/articles/homeownershipdownandrentingupforfirsttimeinacentury/2015-06-19
  • https://www.bbc.com/news/business-45776289
  • https://www.theguardian.com/money/2018/apr/17/one-in-three-uk-millennials-will-never-own-a-home-report
  • csiprop.com/investors-can-look-forward-to-uk-rents-increase-of-15/
  • https://www.thesun.co.uk/money/5590859/one-in-four-middle-earners-own-home-ifs-report/
  • csiprop.com/manchester-top-10-in-the-world-for-fdi/
  • https://uk.reuters.com/article/uk-britain-housing-barclays/barclays-and-uk-government-launch-1-billion-pound-house-building-fund-idUKKCN1LR2P1
  • Image Source: https://www.huffingtonpost.co.uk/2014/05/01/shocking-uk-renting-facts_n_5246159.html

 

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UK Landlords Still Making a Profit, Survey Finds

Categories: Reading and Research

The UK rental sector is buoyant with demand for rental properties increasing and landlords making a profit. By region, the Northwest has shown the highest yields to date.

88% of landlords in the UK made a profit in the last three months (July – Sept), research by BM Solutions found.

The buy-to-let arm of Lloyds Banking Group did a survey of 700 landlords in the UK, finding further that landlords who reported a loss were a mere 4% of those surveyed, with the remaining 8% breaking even.

This is positive news for property investors, one that is buffered by the undersupply of housing in the UK.  

BM Solutions head Phil Rickards said, “Despite many recent challenges to the buy-to-let market, it’s encouraging that more landlords have made a profit from their buy-to-let properties this quarter, and that landlords are feeling slightly more upbeat when it comes to the near-term prospects for rental yields, the UK private rental sector and their own letting business compared to (the same quarter) last year.”

Average rental yields in Q3 2018 were still at a high of 5.9%, albeit not at the record levels seen last quarter at 6.2% – the highest since Q4 2014.

By region, yields in the Northwest were the highest at 6.7%, while the lowest yields were found in Scotland at 4.9%. Central London was at 5.3%.

Tenant demand had increased to the highest level recorded since Q2 2017. The proportion of landlords reporting a drop in tenant demand is now at its lowest point since the end of 2016, falling 8% from the last quarter.

Mr Rickards said, “For those speculating about the future of buy-to-let, the figures supporting tenant demand should help to dispel this myth. Considering the much talked about shortage of housing supply, it is vital that we continue to support a healthy private rental sector and with tenant demand scores improving, or remaining stable across all UK regions, it is clear that the private rental sector still has a very important part to play.”

A third of landlords surveyed raised rents over the past 12 months, representing a slight increase from Q2. There was also an increase in the proportion planning to increase rents in the next six months, reaching 27% from 24%. More landlords are also seeing rents rising in the areas where they let properties, with an increase of 9% from Q2.

Even in the capital, where house price growth has seen better days, demand for residential property continues to rise.

Residential letting specialists Benham & Reeves says that the last quarter has been the busiest in their history. Q3 2018 had a 22.1% increase in transaction volumes compared to 2017 Y-O-Y.

The agency said in a statement: “We now have 22 applicants per property, compared with 16 at the same time last year, a sure sign that the world’s capital, London, shows no sign of lessening in popularity in terms of where to live.

“It’s been a staggering three months when you consider how much the London property market has been in the news, in addition to fears around Brexit continuing to make the headlines. This has not impacted on the appetite for London rentals, however. From small units to large, from new-build apartments to period, basement properties, demand has been high across the board, and at every price point.”

Interested in being a UK landlord and benefitting from the intense demand for housing there? Come check out our latest investment in the Northwest and find out how you can get amazing yields. Give us a call at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!

By Ian Choong; Edits by Vivienne Pal

Sources:

  • http://www.propertyreporter.co.uk/landlords/record-number-of-landlords-make-profit-in-q3.html
  • https://www.mortgagestrategy.co.uk/record-proportion-of-landlords-make-profit-bm-solutions/
  • http://www.propertyreporter.co.uk/landlords/could-average-rents-in-the-north-west-be-about-to-soar.html
  • Featured image: expatriates.co.uk
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6,000,000 Elderly Brits Will Require Care Homes by 2040

Categories: Reading and Research

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Ian Choong
Edited by Vivienne Pal

Sources:

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

Categories: Reading and Research

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

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

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

UK STAMP DUTY FOR INDIVIDUALS OWNING MULTIPLE HOUSES

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

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

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

Best Time to Invest

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

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

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

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

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

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

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

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

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

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

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

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

By Ian Choong
Edits & additions by Vivienne Pal

Sources:

 

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Investors Pay Homage to the King of Fruits

Categories: Reading and Research

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

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

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

Different types of durian served for the investors and their families

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

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

Bonding through durian party

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

Sam Lee during his sharing

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

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

Are they able to guess the durian?

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

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

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

By Lydia Devadas Michael
Additions and edits by Vivienne Pal

 

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Investors Can Look Forward to UK Rents Increase of 15%

Categories: Reading and Research

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

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

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

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

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

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

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

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

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

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

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

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

By Ian Choong
Edited by Vivienne Pal

Sources:

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

 

 

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Manchester Top 10 in the World for FDI

Categories: Reading and Research

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

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

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

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

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

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

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

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

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

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

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

This weekend, learn how you can invest £75K & GET BACK £190K in 5 YEARS with the POWER OF LEVERAGE! Come for the EXCLUSIVE WORLD LAUNCH of an iconic new residential development in the Manchester city centre – THE CROWN On Manchester’s Skyline. Call +60162288691 to book your seats now!

By Ian Choong
Edited by Vivienne Pal

Sources:

  • https://www.manchestereveningnews.co.uk/business/business-news/manchester-foreign-direct-investment-ibm-15103754
  • http://www.businesscloud.co.uk/news/tech-giant-bookingcom-to-invest-100m-in-manchester
  • Featured image: Prolific North
 
 
 
 
 
 
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Is the UK on Sale?
 
 Categories: Reading and Research 
 
 
 
  
 
(LAST UPDATED 15/10/2018)
One of the latest movies to hit the cinema, Crazy Rich Asians, features the members of the wealthy Young family, who are termed “not just rich, but crazy-rich”. As the story goes, the family made their fortune through investing in property. 
Yes, property is tangible and finite – there’s only so much of it on this planet, so it will always be in demand. But some places are better than others. As any seasoned property investor will tell you, location is perhaps the most important thing to consider for the best returns.
In Singapore, house prices as a whole have dropped 5% since 2011. Some areas have been hit more heavily than others. One of the worst hit was Sentosa Cove, where average prices were down by almost 30% from their 2011 highs.
Residential property on the island city remains highly regulated, and a string of cooling measures by the Government this February put a halt on the short run of growth since last year. In Q3 2018 prices went up by 0.5%, compared to the 3.4% rise in Q2.
Other than the slowdown in growth, an additional hit on property investment in Singapore is that local and foreign buyers now have to pay an extra 5% in stamp duty, further reducing returns.
Right now local property investment appears to be giving less-than-stellar returns. So, if not in Singapore, where then can Singaporeans looking to be crazy-rich put their money? 
Currently the exchange rate for the pound sterling is at S$1.81 to £1 (15 Oct). Prior to the 2007 Financial Crisis, the exchange rate hovered at around S$3 to £1.
GBP to SGD over last 20 years (Exchange Conversions)
This means that essentially, the UK is on sale for Singaporeans — at a 40% discount — compared to a decade ago!
The UK is also facing its biggest ever housing shortfall — in England alone, there is a total backlog of almost 4 million homes.
Research by Heriot-Watt University shows England must build 340,000 homes per year until 2031 to meet demand — a figure significantly higher than the government’s estimates.
This shortfall in housing is not new, and multiple failures of the UK Government to spur the house-building industry have caused prices to soar. House prices in the UK grew 32.28% over the past 5 years, and a whopping 323.58% over the past 25 years!
CBRE Research predicts house prices to continue to rise. For the next 3 years, house price growth is estimated to increase by 17.1%, while rental is expected to grow by 21%.
UK house price and rental forecast 2018-2021 (CBRE)
Regional cities in the UK are great places to invest in real estate, as their frenzied pace of development continues, compared to the over-saturated market of London. 
These British regional cities have shown the most promising growth: over the past 12 months since June, Manchester clinched top spot at 7.4%, followed by Liverpool at 7.2%, and Birmingham at 6.8%. Compared to these, the capital only managed a dismal 0.7%.
Price growth of UK cities in last 12 months (Hometrack)
As long as supply is unable to keep up with demand, prices will continue to rise. For the foreseeable future, England’s shortfall in housing is not going to be solved soon, and Singaporeans can take advantage of the currency rate and purchase UK real estate — at a discount!
Are you looking to invest in UK real estate? Don’t hesitate to give us a call at 65-3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!
By Ian Choong
Edited by Vivienne Pal 
Sources:
  • https://gbp.exchangeconversions.com/sgd/charts#chart_20years_rate
  • https://csiprop.com/should-you-invest-in-property-in-singapore/
  • https://csiprop.com/could-birmingham-be-the-next-london/
  • https://csiprop.com/uk-property-investment-beyond-brexit/
  • https://www.independent.co.uk/news/uk/home-news/housing-homeless-crisis-homes-a8356646.html
  • http://www.theedgemarkets.com/article/singapore-home-prices-rise-even-after-additional-property-curbshttps://sbr.com.sg/residential-property/in-focus/singapore-housing-market-fairly-valued-ubs
  • Featured image: The Straits Times
 
 
 
 
 
 
  
 
 
 
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