From the golden postcodes of London’s Mayfair to urban chic in the cities of the north, the UK remains hot property with Middle East investors.
– Written by Cityscape Magazine
The UK market has long held an attraction with Middle East property investors. From the status-rich postcodes of London’s Mayfair and Knightsbridge, to the steady increase in buy-to-let property in the cities of the north, there are plenty of opportunities to be had, depending on your budget and your plans on how to use the property.
Where to Invest
For many Middle East investors the prestige of a London address is still a powerful motive when considering investing in the UK and many brokers still recommend the capital as an ideal investment base.
“If you are looking for a safe haven investment then I would still look no further than the traditional prime central London hotspots of the Royal Borough of Kensington and Chelsea, and Westminster. Capital growth and rental yields may prove to be rather conservative in these locations but their values have proven to be extremely resilient to both domestic and global economic issues,” recommended Jonathan Mount, Partner at The Buying Solution (the independent buying consultancy of Knight Frank) who travels to the Middle East regularly.
“If you are looking for slightly more exciting capital appreciation then looking further afield to areas going through significant regeneration is going to be the route to take. Many areas in East London, for example Canary Wharf, Tower Hamlets and Hoxton have experienced excellent short-term growth and the projections over the next five years are equally strong,” he added.
However, Camilla Dell, Managing Partner of independent property buying agency, Black Brick, thinks London is heading for a fall: “Traditionally, a lot of our Middle Eastern clients have tended to buy in the ‘golden’ postcodes of Knightsbridge, Belgravia and Mayfair. We believe these locations are due a price correction in the next 6 to 12 months, so for investors in the current market we tend to advise looking further afield in order to maximise both the rental yield and capital growth prospects.”
Philip Churchill, Co-Founder & Managing Partner of 90 North, a company offering sharia-compliant property investment, believes regional cities hold the key. “If you want to buy and hold for the grandkids then London is great but if you’re looking for a bit more then you have to look outside London. There is plenty out there in strong regional cities,” he said.
90 North co-invests in all its property deals, and offers sharia-compliant financing and ensures that tenant use is also sharia-compliant.
Ray Withers, Chief Executive of property investment specialists Property Frontiers, reckons some of the best opportunities can be found within the London commuter belt – cities within an hour of London and with good transport connections. “Obvious choices are Oxford, Reading and Cambridge. Cities like this should see above market capital growth and yields of around 4% can be expected,” he said.
“Buying in one of the UK’s other major cities is also a good idea right now; Manchester, Liverpool, Birmingham and Bristol all have dynamic local economies and an undersupply in housing. Prices in these areas are generally much cheaper than in the south east and yields of more than 6% can be achieved,” he added.
On the Market
The UK real estate market is particularly buoyant right now, with a wide range of new builds, conversions and older properties all up for sale.
Launching in London on September 10, Alto Apartments at Wembley Park will tower 19 storeys high, enhancing the skyline above the famed Wembley Park.
Alto Apartments will include 133 one, two and three-bedroom units, 24-hour concierge, gym and residents-only water gardens. The higher floors also have views over the iconic Wembley Stadium arch. Apartments are priced from GBP 375,000 for one bedroom and GBP 495,000 for two.
“Alto Apartments presents the ideal opportunity for Middle Eastern property buyers to access the highly desirable London market,” said Sophie Hapgood, Residential Marketing Manager, Alto Apartments.
Wembley Park already has a developed infrastructure in place with numerous transportation choices and amenities on site including London Designer Outlet for shopping and dining, The SSE Arena, Wembley and National Stadium.
Another sporting destination in the city is also presenting hot investment opportunities. Wimbledon Hill Park is popular with overseas buyers due to its tranquil and family friendly setting, fantastic education establishments – which includes the Al-Ahliah School of Arabic, part of Kings College School – and its short journey times to central London.
Wimbledon Hill Park is set within the grounds of what was once the ancestral home of the 2nd Duke of Wellington. The project offers a resident’s gym, boardroom, private cinema room as well as a concierge service. Off-plan sales are being taken on Dukes Gardens, which offers a collection of spacious two and three-bedroom apartments. Prices start from GBP 1,150,000.
“Recent research highlighting that Middle Eastern buyers accounted for 5% of the market in Wimbledon in 2014 can be backed up by the profile of purchasers at our Wimbledon Hill Park development. Here, we have continued to see a high level of interest, particularly in the houses, and a third of these sales so far have been to Middle East buyers,” commented Danny Rowland, Head of Sales, Berkeley Homes (West London).
Outside of London, Victory Pier is situated right on the Medway Waterfront in Kent, forming part of an exciting, multi-billion pound ‘Medway Renaissance’ programme that has seen a total transformation of this stretch of the River Medway. The Peninsula is the latest phase of apartments at Victory Pier, comprising studios, one and two-bedroom apartments. Once complete, the apartments will sit alongside a host of shops, bars and restaurants and a private residents’ gym. Prices start from GBP 185,000 for a studio apartment.
In Manchester, Custom Quay is a conversion of an iconic commercial building within Salford Quays, offering exceptional water views. The modern refurbishment will create 60 one and two-bedroom duplex apartments which benefit from a communal roof terrace with stunning panoramic 360 degree views over the quays, private gated car park and landscaped courtyard.
“Salford Quays itself is booming, meaning that residents can enjoy the area’s prosperity and the career opportunities that such economic advancement generates. Yet, as well as being a thriving area in its own right, packed with shops, restaurants and cultural attractions, the tram stop just 150m away, enabling access to Manchester city centre in under 15 minutes,” said Withers from Property Frontiers. Prices start from GBP 127,000 for a duplex.
The Small Print
As with any major investment, buying property in the UK does come with a certain amount of red tape. The good news is that there are no restrictions to foreigners buying property in the UK.
However, this does mean that you will be taxed the same as domestic buyers on your purchase. Be sure to budget for Stamp Duty Land Tax. Some properties are also liable to an on-going annual charge, which as of April 2016 will affect properties from GBP 500,000. When you come to sell the property, Capital Gains Tax will also become due, which can run as high as 28 percent.
As a non-resident landlord you will need to register with Revenue & Customs and pay tax on your net profits from renting. Also, tax relief on mortgage costs for buy-to-let landlords is being scaled down to just 20 percent of the interest by 2020.
You also need to be aware of restrictions when purchasing a listed building – as many home improvements are forbidden.
For the best advice, use a search agent. They will charge around 2 percent of your purchase but will save you from making an expensive mistake.
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Cityscape magazine is the Middle East’s leading monthly real estate investment title and is owned and published by Informa Middle East Limited. For more information, please visit www.cityscape.org
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