Why Property Is Still the Most Lucrative Investment in 2017

If looking for somewhere to invest your money, it’s wise to evaluate the condition of the property market before making a decision.

Investing in bricks and mortar has long been a favoured approach by the general public, providing long-term security, ongoing rental income and equity for future investments.

This year, the question is whether real estate still holds the influence it once did, especially with concerns over Brexit and government clampdowns on the buy-to-let sector.

However, confidence in the market remains strong and experts believe that, despite external pressures, the underlying pattern of supply and demand still makes property a wise choice as we move further into 2017.

Strong Performance

Signs for buy-to-let property investors are promising for 2017.

Property experts from Capital Economics, Nationwide and Halifax all predict a rise in UK house prices throughout the year and for buy-to-let investors in particular, the signs are especially promising.

Last year, 11 out of 12 regions across the UK witnessed an increase in rental values, pushing the average monthly income to £892. A report by the Royal Institution of Chartered Surveyors (RICS) also predicts that rents will increase by 25% in the next few years.

However, as a note of caution, this positive driving force is unlikely to come from London. Despite expected growth in the rest of the UK, prime central London could even see prices fall by as much as 5% over the next 12 months according to estate agents Strutt & Parker and economic forecasters Volterra.

Conversely, the UK’s lack of homes is a positive sign for buy-to-let investors. Lack of supply means prices remain high and thus would-be buyers are pushed into the rental sector.

This is something the government are looking to address by launching a £7 billion house building program to construct up to 200,000 new properties. Investors should take note of where these new schemes are taking place for potential buying opportunities.

Markets are Riskier

Investing in stocks and shares is riskier than ever these days, while there is still security investing in property.

Despite a fair bit of scaremongering over Brexit, the property market held up extremely well after 23 June 2016. Lending for purchases within the buy-to-let market rose from 28% in the third quarter, to 38% in the fourth. This is exactly the same figure as before the Referendum and shows that real estate is still a safe bet.

On the other hand, financial markets are a lot more susceptible to volatility – as seen with the sudden drop in the pound. Investing in shares is a high-risk strategy as well, especially during this time of political uncertainty, and does not provide the short-term access to equity that property brings.

Markets require constant attention and a diversification approach that can become complicated. By investing in a managed let through a qualified agent, there’s none of this ongoing stress.

Instead, rental yields are assured over a period of two to three years and can be as high as 10% in some areas. Property also allows you to plan a long-term exit strategy, as well as providing a physical asset to leave in your will.

Points of Note

Location is important when investing in property and London is no longer the hotspot it once was.

Location is still the key to a successful property purchase. The expected 3-5% national growth in house prices will be driven by hotspots in the north-west and Yorkshire where long-term yields can be gained with low-entry point purchases.

The student sector remains strong, especially with purpose-built student accommodation becoming increasingly popular. The PBSA market is expected to have a value of £46 billion by September with nearly 30,000 new beds being added into the sector this year.

For landlords who use a letting agency to manage their investment, the chance to sit back and take in assured yields is a big draw. Combined with high demand and more people willing to rent, this makes property still the most lucrative investment in 2017.

If you’re ready to invest in property, get in touch for a chat with us today.

With London out of the picture for many investors, you might be wondering where the best places are to invest your money. South West and Northern England and Scotland are the hotspots for this year. We take a look at why 2017 is the year to invest in the North and why you should invest in Plymouth.

Three Reasons Why North Liverpool is a Great Place to Invest

The number of development schemes in North Liverpool, with the sole aim of improving the local area and economy, is staggering. This can only be good news for property investors.

Whenever a local economy is given a helping hand by government investment, jobs are created and house and rent prices rise as demand increases. Liverpool has been going through regeneration for a while now, but recent developments show that now is a great time to invest in the city before prices increase further.

The development schemes include a large amount of planned investment going into the local road network, and pedestrian and cycle access. This is in addition to the Liverpool Waterfront, the long-term investment of the docks, along with the potential re-opening of Lime Street train station as part of Merseytravel’s 30 year plan.

It’s thought that these will create thousands of jobs in North Liverpool as well as increasing tourism and the reputation of the city as somewhere to visit and live.

Out of all these exciting plans, three stand out, including the first new link road in Liverpool City Centre for a decade.

A New Link Road

Junction of Leeds Street and Great Howard Street in North Liverpool where a new link road will be built.

Image credit: Paul Holloway via Flickr

Potentially one of the biggest improvements investors could see coming to North Liverpool is the building of a new link road between the junction of Leeds Street and Great Howard Street down to Princes Parade at the waterfront.

The new road will cost £20 million and is being built alongside a £250 million investment scheme, the Better Roads Programme by Liverpool City Council, which includes a number of improvements to the surrounding roads as well as pedestrian and cycle routes.

It’s hoped that the new link road, which will run through the existing King Edward industrial estate, will not only improve access but will help to ease congestion and assist with the regeneration and growth of North Liverpool’s industry and economy.

This new link road will also improve access to the waterfront and the new cruise terminal.

A New Cruise Terminal

North Liverpool will be getting a new cruise terminal to serve up to 3,600 passengers at a time.

Image credit: Al Disley Images via Flickr

Liverpool Waters became a turnaround facility for cruise ships in 2012, and since then the number of vessels visiting has doubled, including the Disney Cruise Line which first called at the port in 2016. The port is award winning and was named the UK’s best port of call in both 2013 and 2014. This seems to be a title Liverpool is eager to reclaim.

A new cruise terminal is planned at Princes Parade, on the former Princes Jetty, to allow for larger cruise ships to visit, which will mean more passengers (and crew) spending money in the city and boosting Liverpool’s economy. Not to mention the jobs that will be created when building and then staffing the terminal.

The new terminal will be large enough to handle up to 3,600 passengers at a time and will include passport control, a lounge, cafe, taxi rank, pick up point and car park. A new quay will also be built along with access to allow coaches to pick up and drop off passengers.

A new cruise terminal isn’t the only investment in North Liverpool that will attract visitors.

A New Football Ground

Everton FC could be moving their stadium to Bramley-Moore Dock, North Liverpool.

Image credit: Airviews Photography via Flickr

Also potentially coming to Liverpool’s waterfront is a new football stadium. Everton Football Club are in discussions with Liverpool City Council about choosing a site alongside the Mersey upon which to build their new stadium.

The new football stadium would become a landmark on the historic banks of the river. It’ll not only attract football fans from across the country to Liverpool, it will also create jobs and increase spending in the city, all helping to boost the economy.

At the time of writing, the city and Everton fans are waiting for the announcement about the site of their new stadium. One proposed site is Bramley-Moore Dock, which was home to the Liverpool Sound City music event for two years before it was moved elsewhere for 2017. The announcement is due within the next couple of months.

Just as the economy starts to take an upward turn is the best time to invest in property. By investing in North Liverpool property now, you stand ready to reap the rewards once these developments are completed.

Eldon Grove and Reliance House, both situated just down the road from the site of the new cruise terminal and link road, are the perfect places to invest and not only gain a piece of history, but a foothold as Liverpool’s economy takes off.

If you’re interested in investing, or would like to know more, get in touch today.

For more information on what makes Liverpool such a great city, you might enjoy our 14 Fun Facts to Love About Liverpool.

Student Property Demand Rises in Liverpool

With around 70,000 students in Liverpool during term time, it’s no surprise that demand for accommodation is high. And with the number of undergraduate placements rising from the 2015/16 academic year, there’s still need for high-quality housing within the city.

For investors, this means numerous opportunities are available in the thriving buy-to-let sector, especially for purpose-built student accommodation.

Increasing Numbers

Student numbers at Liverpool University are increasing.

Image credit: Vita Student via Flickr

 

The University of Liverpool, John Moores University and Liverpool Hope University comprise around 60,000 students alone, an increase of around 10,000 from last year.

As well as the three main universities, there’s also the Institute for Performing Arts, School of Tropical Medicine and numerous other colleges within the city – pushing the total number of students up even further.

Research by the Mistoria Group shows that these figures have caused a 37% growth in demand for shared student accommodation within a three mile radius of the city centre.

Why Liverpool?

Liverpool albert dock

Image credit: 7426_0594 via Flickr

Developers have been quick to recognise the rise in student numbers and short supply of bespoke housing in Liverpool. With demand for high-quality accommodation growing, a number of uber-modern student developments, such as the luxurious Fox Street Village and Queensland Place, have sprung up in recent years.

With a rich cultural and sporting heritage, combined with a diverse nightlife and affordable housing, Liverpool in itself will always attract high student numbers. With its higher education institutes offering a vast array of courses, there’s no sign of the trend slowing down.

As another bonus, an increasing number of students are remaining in Liverpool once they’ve graduated. This flow of young professionals boosts the rental sector even further, especially as renters with a career-driven mindset make for high-quality tenants.

Increased government investment in the ‘northern powerhouse’ is coinciding with massive regeneration schemes in Liverpool itself. As we move further into 2017, 250 major new schemes worth £10.5 billion are seeking planning approval or at early stages of project development.

Purpose-Built Student Accommodation (PBSA)

Students studying for exam

Image credit: NEC Corporation of America via Flickr

The 560,000 rooms that make up the UK’s PBSA market are estimated to be worth £46 billion in total. This is being helped as both students and universities move away from traditional halls of residence style accommodation.

Purpose-built halls cater to the demands of modern-day students, with private bathrooms, large common rooms, strong Wi-Fi connections and even gyms in some cases. They’re especially appealing to wealthier foreign students whose parents like the idea of a secured building in close proximity to the campus.

Purpose-built halls will often be managed by a letting agency. This is a recommended route into the student sector for investors. Everything is controlled on your behalf, from dealing with student enquiries to collecting payments. Rental yields of around 7-10% are assured with a guaranteed stream of tenants every year.

 

To find out more about investing in Liverpool’s student property market, get in touch for a chat.
If you’d like to know more about investing in student accommodation, you might be interested in The Boom in Purpose Built Student Accommodation.

2017 Is The Year to Invest in The North

Much of the UK’s investment throughout 2017 will be centred on the northern powerhouse. The government is pushing hard to boost regions outside of the capital, meaning cities such as Manchester, Liverpool, Leeds and Newcastle will see increased funding over a range of sectors.

For buy-to-let property investors in particular, these plans can be of great significance. With a stronger local economy, higher rate of employment and better quality of tenant, the already strong northern housing market looks set to flourish even further in 2017.

Northern Economy

Views over Edinburgh

Image credit: Jon Mountjoy via Flickr

Ever since George Osbourne’s declaration of the new ‘northern powerhouse’ back in 2015, a renewed vigour has been evident in helping these regions match the draw of London.

Following a steady stream of regeneration projects since the turn of the century, cities such as Manchester and Liverpool have been transformed into hubs of major economic interest. Wherever there is space, there seems to be some sort of investment scheme taking place, be it office, industry, retail or residential.

We’ve just witnessed the second UK Northern Powerhouse International Conference & Exhibition, where over 2,500 business leaders gathered for a series of talks from public and private sector experts.

The area north of the ‘Midlands engine’ is home to over 15 million people and generates around 20% of the UK’s gross domestic product. International investment here is growing at a faster rate than any other part of the UK, whilst Theresa May has just announced a major industrial strategy for the north.

Despite some opposition, the High-Speed Two (HS2) railway line linking London with Manchester has just received final approval from parliament. When finally completed, HS3 will also greatly improve travel times between the UK’s main northern cities.

Northern Property

Bury tram

Image credit: Andy Roberts via Flickr

Property prices in the north generally sit below the national average, especially when compared to London. This means yields frequently hit the 9-10% mark, especially in areas with many students and young professionals who rely on the rental sector.

Despite the temporary uncertainty surrounding Brexit, the economy has remained resilient and at no time in the UK’s history have more people been in employment. It’s thus no wonder that the vast majority of experts such as Nationwide, MCI Mortgage Club and NatWest, feel positive about property in 2017.

There are plenty of excellent opportunities in the north, where entry prices of around £70,000 will result in strong capital growth in the long term. This is simply unattainable in London. Furthermore, estate agents Savills, has forecast that rents will rise by 2.5% across the UK in 2017.

Buy-to-Let Sector

Leeds University - there's a large student population in the north who need somewhere to live.

Image credit: Mishimoto via Flickr

The northern rental market is buoyed by a strong demand for student housing, particularly for purpose-built accommodation. Cities such as Manchester, Liverpool, Leeds and Edinburgh attract thousands of students every year, meaning you’re almost certain of enquiries once placed on the market.

To negate the traditional risks of student renting, for example damaged property or unpaid rent, many investors are drawn towards managed lets. The estate agency will take care of things on your behalf, allowing you to sit back and wait for the guaranteed yields to roll in.

 

If you’re interested in investing in the North, contact us today to find out about our opportunities.
If you’d like to know more about the potential for the northern powerhouse, check out how Property investment in the North is to be boosted by Theresa May’s industrial strategy.

Posted in UK

Now is the Time to Invest in Edinburgh as Rents Set to Rise

Edinburgh has been going through great change over the last decade with the installation of a new tram system. With that now complete, the focus has turned to the commercial side of the city, impacting on the residential market.

There are plans for new commercial buildings and the St James Centre off Prince’s Street is now undergoing a £850 million refurbishment, promising an influx of new jobs.

With all of this growth comes more people looking for somewhere to live. Experts are predicting rental prices to rise over the next five years, meaning that Edinburgh is one of the best places to invest in right now.

Building works taking place in Edinburgh

Redevelopment in the city centre. Image credit: Magnus Hagdorn via Flickr

A Shortage in Properties

While businesses are flocking to Edinburgh taking up old and new commercial spaces, new homes are not being built to accommodate their employees. With such a lack of residential properties for a rapidly growing city, Edinburgh’s rental market is in a state of high demand and low supply.

A recent study by property consultancy JLL has looked at the property market and building industry in Scotland. The UK as a whole is going through this shortage of homes, which has been bolstered by the latest political and economic outlooks caused by the recession and, more recently, Brexit. What makes Edinburgh different is that the city continues to grow.

Director of JLL’s Residential Team, Jason Hogg, has said:

‘Housebuilding in Scotland continues to persevere against the backdrop of political uncertainty. The industry is in a confident and optimistic mood, buoyed by strong demand for residential in key city centres.

“However, there’s no doubting that the key challenge for the year ahead is to address the shortage of supply.”

View of Edinburgh from Calton Hill

The Edinburgh cityscape. Image credit: Moyan Brenn via Flickr

What Does This Mean for Investors?

As a result of their study, JLL predicts that due to this shortage, house and rental prices will rise by 23.5% by 2021. That’s almost double the UK average and significantly higher than London by 4%.

This means that if you want to invest in Edinburgh property, now is the best time, before prices rise any further. But it also means that rents are likely to rise as people looking to buy are priced off the property ladder and demand for rental properties surge.

JLL’s study shows that by 2021, tenants will likely be paying 20% more to rent than they are now. To give you an idea of what this could be, the current average asking rent in Edinburgh is approximately £1,500 a month, so by 2021 the average rent in the city could rise to £1,800 a month.

Edinburgh University

Edinburgh University. Image credit: Alberto Garcia via Flickr

Other factors To Consider

It’s not just new commercial buildings and refurbishments, and an influx of new workers creating such demand for properties in Edinburgh. The focus on new student accommodation is also a factor.

Home to three universities and a number of colleges, Edinburgh is a hot spot for students and the past year has seen a boom in student accommodation. Some of this accommodation are  managed purpose-built flats and halls that investors can rent to students. Others are traditional individual properties that investors will adapt to create bedrooms to rent out to groups of students. This latter option often means fewer properties are available for families and professionals, again hiking up the demand.

For the property investor, this means that not only is Edinburgh a great place to invest in right now, but there are a number of options available. It’s worth doing your research and speaking to a professional agency or estate agent to make sure you’re investing in an Edinburgh property that will suit you.

If you’d like to find out more about investment options and properties in Edinburgh, get in touch with us today.
Want to know more about Edinburgh? You might be interested in our 11 Facts About Edinburgh you Might Not Know.

Liverpool’s Reliance House Development Perfect for Prime Location Investment

Located in the heart of Liverpool’s business district, Reliance House is set to be converted into 100 luxurious residential apartments. The project presents a fantastic opportunity for buy-to-let investors, with expected rental yields of 7-8% and long-term capital growth.

The £15 million project will be completed by Legacie Developments, providing a further boost to Liverpool’s thriving rental sector, especially in prime city centre locations.

Prime Location

Located on Water Street, Reliance House is situated just a short walk from the Waterfront with fantastic links into the city centre. Various amenities can be found on nearby Castle Street, along with upmarket bars, restaurants and cafés.

Image credit to Wikipedia. Reliance House is in the heart of the business district and close to transport links and amenities.

Image credit: Wikipedia

Reliance House is also opposite the alternative James Street railway station entrance. Although access is limited at off-peak times and closed at weekends, this is of great convenience for commuters who use the Merseyrail network.

The city centre is a proven hotbed of buy-to-let investment, with guaranteed enquiries for rented properties and a steady stream of graduates looking for jobs/accommodation. This also leads to healthy rental yields, with projected returns of up to 8% based on current market projections.

Liverpool in itself has seen plenty of investment since the turn of the century, with no signs of slowing down. An estimated £10 billion regeneration is planned over the forthcoming decade, helping modernise a city already draped with a strong cultural heritage.

Design

The Reliance House building is far bigger in size than you may expect if stood at the main Water Street entrance. The front section is made up of robust Portland stone, showcasing a strong Edwardian design that has stood up well to the test of time.

At the rear end, an impressive red brick façade adds a touch of character to the building, backing onto the picturesque Church of Our Lady and Saint Nicholas.

Reliance House has access to great transport links making it a fantastic investment opportunity.

Image credit: Wikipedia
Reliance House has great access to transport links.

 

The development will create 73 one bedroom apartments and 27 two bedroom apartments, designed to modern standards with lavish high ceilings and large sash windows.

The one bedroom apartments will comprise a large living area, with generous space for lounge, cooking and dining, as well as a study zone in the bedroom. An additional store room is also provided.

The two bedroom apartments will include two separate bathrooms, one of them en-suite. They’ll also include double-bed sized rooms and a large kitchenette area, perfect for young professionals looking to split the cost of rent.

Further Advice

Reliance House offers secure and exceptionally high-quality real estate, located in a prime spot in Liverpool city centre. A spokesman from the Legacie has said of the development:

We saw its potential straight away, in terms of the way it looks – it has a beautiful Portland stone frontage and it’s nicely proportioned with high ceilings which give a real sense of space – and its location which couldn’t be better.

It’s right in the centre of the business district, facing India Buildings, there are great views overlooking St Nicholas’ Church gardens and the waterfront, and all the restaurants and bars on Castle Street are just a few minutes’ walk away.

From a developer’s and a buyer’s point of view, it really is a prime spot and a prime building.”

reliance-house-liverpool-external

The one bedroom apartments will typically be 499 sq. feet/46.6 sq. metres and start at £120,000 in price. Their two bedroom counterparts are 609 sq. feet/56.6 sq. metres and will range from £160,000 upwards.

The 100 available properties will be sold off-plan to both buy-to-let investors or private buyers. A £5,000 reservation fee will be required to secure your interest.

If you’d like to know more about the Reliance House redevelopment, get in touch with us.
Or for more about investment opportunities in Liverpool click here.

 

Redevelopment of Liverpool’s Eldon Grove Has Finally Begun

After 16 years of neglect, redevelopment of the Eldon Grove tenements in Liverpool’s Vauxhall has finally begun.

A major boost to the surrounding area, new blocks of luxury flats will be constructed on the site alongside refurbishment of the historic building itself.

Work starting on the site has been a long time coming with the initial planning application submitted in late 2015. Liverpool City Council only approved the proposal in December 2016, allowing designers JGLT Developments to make a start on their regeneration plans.

History of Eldon Grove

Eldon Grove was a council development opened in 1912 by the Countess of Derby, Alice Stanley. The buildings consisted of three blocks, originally used as labourers’ dwellings to home local workers.

Historians note Eldon Grove would have been the most modernised accommodation of its time, particularly as they incorporated baths with hot water taps. With balcony access, they are also deemed to be one of the oldest examples of council flats outside London.

Eldon Grove community playing soccer

As time moved on, the building was converted into student housing but eventually fell out of use. With previous regeneration projects falling through, Eldon Grove was abandoned and became completely derelict.

Being the last remaining original-style, timber frame tenement in Liverpool, the historic site was given Grade II listed status in 1993. This has lead Victorian Society supporters to campaign against construction work, particularly as the new surrounding flats will obstruct its view.

Need for Repair

The Eldonian Company, who are responsible for Eldonian Village and Vauxhall regeneration schemes, have been working with JGLT on the project. Their representative, Paul Foster, was left in no doubt over the building’s need for urgent attention. He told councillors:

“You’ll have seen this morning that Eldon Grove is in a terrible state, dilapidated and on the point of becoming unrepairable… These buildings will not survive another winter.”

“Eldon Grove has been derelict for 20 years now and has become an eyesore to the community. If it doesn’t get redeveloped shortly this Grade II listed building will be beyond repair.”

“We really do think this is the last chance for this building.

Eldon Grove as it looks down before redevelopment starts to create luxurious flats perfect for investment.

Image credit: SPDP via Flickr

This appeal was successful and after Liverpool council’s approval late last year, both developers and locals alike are eager to see the completed project.

Development Plans

As well as restoring the Eldon Grove building to its past glory, the multi-million pound project will see new flats erected on the premises. This will include five blocks of one and two bedroom apartments, as well as New York style duplex penthouses.

In total, this will create 84 new luxury rooms, with further plans to revamp the surrounding space with landscape gardens.

The New Eldon Grove

A representative of the Eldonian Company commented on the developments:

“It will look stunning and will kick start the regeneration of L3 again, increasing house prices and making the area a nicer place to live – being very close to the city centre it’s a perfect location for city living but with a relaxing lifestyle.”

JGLT have already received numerous enquiries from property investors. They expect the project to take around 12-18 months to complete before new residents can move in.

 

If you’d like to know more about the Eldon Grove redevelopment, get in touch with us.
Or you can find out more about the original building and site as we look at Eldon Grove – a Liverpool Treasure Comes Back to Life.

Can I Let My House Without Telling My Lender?

The short answer to this question is no. Failure to inform your lender should you rent out your property will infringe upon the legal conditions of the initial mortgage contract.

There’s been a clampdown on ‘accidental landlords’ since 2013, with banks and lenders actively searching for properties which have been listed on the rental market without their consent.

If you do wish to let to a third party, a ‘consent for lease’ is required which can only be obtained by applying to the mortgage lender. Because of this, inform your supplier immediately if you wish to rent out your property.

Green door and green window

Terms and Conditions

The terms and conditions of your primary mortgage agreement will lay out the regulations around letting to another party, although they may be tucked away in the small print somewhere.

Trying to get away with a sub-let without informing the lender isn’t recommended. If they find out, the whole mortgage value could be called in, meaning you’ll be evicted and owe the full sum.

Likewise, letting a property requires you to have landlords building insurance. If something were to go wrong, i.e. with fire damage or mould, the insurer may simply refuse to pay out.

In terms of the main high street banks, ‘consent to let’ details can usually be found on their website. Although some conditions may differ from lender to lender, a few recurring stipulations appear. They include:

  • The change in circumstance must be genuine. If the intention was to always let out the property in the first place, this will hinder your application.
  • To get around this, lenders usually insist the property owner pay the mortgage for at least six months.
  • Interest rates will typically rise by around 1% to 2%, plus an administration fee.
  • An application form needs to be completed including detailed information about the reason for letting, expected tenants, earning potential, etc.

woman signing a document

Clampdown

The 2013 clampdown came as lenders became suspicious some homeowners were keeping their rental arrangement quiet. Although many were simply not aware they had to disclose this information, others were purposely doing so to avoid additional charges.

Likewise, as opposed to a standard mortgage, a buy-to-let application requires more strenuous eligibility criteria to be fulfilled. Naturally, lenders won’t take too kindly to a rental arrangement without a buy-to-let mortgage in place.

By obtaining a ‘consent to let’, this doesn’t necessarily mean you’ll lose the existing mortgage agreement or be out of pocket. In some cases, the lender may look favourable on the new occupants, thus granting the ‘consent to let’ without additional interest rates being added.

In this respect, your choice of tenants is important to consider. If they’re low earners with a bad credit rating, a ‘consent to let’ is harder to come by or you may be penalised more as the primary mortgage owner.

Buy to let building

Further Advice

A mortgage deal will be issued in relation to your personal circumstances. Of course, if you choose to let to another individual, these circumstances will have changed. In such an event, the lender may wish to alter the mortgage arrangement terms.

Remember than any purposeful non-disclosure could have financial penalties or even more severe legal implications should the terms be willingly broken.

To avoid any confusion over this issue, speak to your mortgage lender or seek professional legal advice beforehand.

If you’re interested in becoming a landlord, you could invest in student property which is set to remain a great investment in 2017.

Posted in UK

Dubai is Being Hailed the Top Investment Spot for 2017

In a competitive domestic property market and due to added government pressure on the buy-to-let sector, many investors are considering international real estate as an alternative. Your options are potentially limitless in this respect, with a whole host of investment opportunities at your disposal.

One area to look towards is Dubai – the most populous city in the United Arab Emirates with a prime location on the Persian Gulf. Property in the esteemed Emirate has long been sought after, and despite market uncertainty around 2009/10, a period of economic stability has since ensued.

With solid employment numbers, a healthy tourism sector and the looming Expo 2020 on the cards, Dubai is now one of the leading property hotspots in the world as we move into 2017.

Positive Forecast

The recent ‘Middle East Private Capital’ survey by property management consultancy firm Cluttons pits Dubai as the most preferred real estate investment location for 2017.

This has been backed up with numerous property forecasts suggesting Dubai property prices will remain stable throughout the first half of 2017, experiencing a much-anticipated rise as we move further into the year.

The upsurge in oil prices along with the political and economic upheaval in the UK and US have made Dubai a desirable place to invest.

Image credit: Maher Najm via Flickr

One reason for this is the expected upsurge in oil prices, a major boost to any Gulf economy, leading to a stronger demand for real estate in the region.

Another interesting angle comes with the US Presidential result, where interest in Dubai property boomed after the Trump victory. Many investors see the Emirate as a safe investment with the future of America, and also the UK post-Brexit, as too unpredictable.

Taking the plunge now when market conditions are most favourable is the best way to achieve the highest long-term gains and a solid ROI.

Life in Dubai

Although Islam is the dominant religion of the UAE, there’s not the same dogmatic approach in Dubai as with other regions of the Middle East. For example, sports gambling and the consumption of alcohol are permitted in licensed premises.

Dominating skyscrapers, luxurious beaches, a westernised culture and booming tourism sector have all played its part in attracting both holidaymakers and investors to the city. The rich and famous often holiday in Dubai, further boosting its reputation, enjoying an array of extravagant restaurants, bars, beaches and hotels.

Dubai has become a tourist hotspot thanks to its wealth, sights and beaches.

Image credit: krebsmaus07 via Flickr

Transport links are also highly commended, with Dubai International Airport located just 2.5 miles from the city centre, along with a modernised metro line, tram service and large bus network.

Expo 2020

As previously noted, the revered World Exhibition is being held in Dubai in 2020, a proven catalyst of activity in the property market. In total, Expo 2020 is expected to create nearly 300,000 new jobs and inject around £35 million into the economy.

Although many British investors may not be familiar with the event, the Expo is a major coup for the host city where the world’s leading entrepreneurs gather for a wealth of exhibits and presentations.

Dubai's great transport network adds to its investment appeal.

Image credit: Raihan S R Bakhsh via Flickr

When preparation for Expo 2020 intensifies, the job sector will thrive – mainly in the construction, engineering and hospitality arenas – leading to a vast demand for residential property. The buy-to-let market in particular will flourish, with rental yields being as high as 10-12% in some areas.

Investment Strategy

Before making an investment in an international market, it’s recommended to use a UK-based estate agent to guide you through the process. They’ll have a more informed view of how the Dubai property market is performing, as well as the prime investment spots.

If you’re ready to invest in Dubai, get in touch today.
Would you like to know more? Check out our 11 Fun Facts About Dubai.

Rental Growth Expected to Rise in 2017

Landlords can expect rental prices to rise over the course of 2017. The UK property market has stayed strong despite a turbulent year, with confidence remaining in the buy-to-let sector in particular.

With this in mind, it may be a good time to jump onto the property ladder or expand your portfolio, especially as mortgage interest rates remain low.

Positive Signs

Through 2016, rental growth did increase but at a slower rate from the year before. This was to be expected however, notably with the unexpected Brexit result stalling market movement for a short period.

Pound coins stacked

Overall rental growth shrunk from 2.34% to 1.12%, although recent forecasts by property lender Landbay show this trend will reverse in 2017. Prices should start to increase above the 3% mark again, especially in buy-to-let ‘hotspots’ across the country.

In monetary terms, the national average rent is currently around £1,188 per month, an increase of £132 from the same time last year. Landbay are confident this increase rate will rise again, boosted by a competitive rental sector.

The company’s chief executive, John Goodall, says that:

“Tenants will have little choice but to compete for what properties are on offer. As a result, we expect rents to rise faster than the pace of inflation next year, with growth tripling to 3% by the end of 2017.”

London Bubble

Although the UK as a whole still experienced growth in the rental market, albeit at a reduced rate, this couldn’t be said for London in 2016. Rents in the capital peaked in April before falling by -0.31% in May.

Tower bridge in London at night

Landlords may be advised to consider other regions with healthy rental yields before an investment. For example, the North West, East Midlands and Yorkshire have all been attracting interest due to their cheaper property and sustained demand.

Moving Forward

Estate agents and property speculators are confident that landlords will see rental yields improve as we move further into 2017. The slowdown in the previous 12 months was due to external factors rather than an underlying weakness in the market itself.

For example, as well as the ambiguity surrounding the EU Referendum result, there was an upsurge in buy-to-let purchases before the stamp duty levy was to be incurred in April. This led to an increased choice for tenants, thus pulling rents down. A similar event is not expected within the next 12 months.

Business man with pen and paper

The government is keen to tighten mortgage controls on landlords, and there will be a removal of interest relief on the buy-to-let sector, which will inadvertently cause rents to increase.

Looking at the UK market as a whole, many potential first-time buyers are more inclined to rent rather than buy. Tenants will thus have little choice but to compete in the same buy-to-let sector, another factor in driving up rental costs.

2016 witnessed a whole host of external interventions in the private rental sector, helping explain the slowdown in rents across the UK. However, the fact that growth still occurred shows the market remains a wise investment for prospective buy-to-let investors, especially as most commentators predict further rent rises of 2-3% throughout 2017.

 

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If you’d like to know more about being a landlord, you might find Changes to Lettings Agency Fees: What You Need to Know useful.