Archive for the ‘Property Developments’ Category
The property investment market in the UK is experiencing mixed fortunes of late, house prices seem to be up one week down the next, growth expectations seem to change significantly depending on which mortgage lender publishes results and statistics one factor that most agree on is the rental prices in the main are steady and increasing.
The sector that seems to be dominating the headlines for consistent high performance is that of the Student Property Investment market.
With increases in the number of wealthy overseas students applying for UK Universities especially from locations such as China, India and the Middle East where high value is placed on a UK university education; in turn rental remand for purpose built student halls is on the increase and creating opportunity for property investors seeking stable and high rental incomes.
“As an investment, student accommodation is relatively low risk and provides a secure income”
“Occupancy levels remain high, especially when compared to the vacancy rates in some mainstream sectors, and most university towns remain under supplied.”
Every day the team at Gower & Mae speak with our current, new and registered clients regarding the property investment options in the market place. A consistent request from our clients is for more information on suitable student housing rental projects.
As with any property purchase a number of factors need to be considered when acquiring student property for investment, if the property is pre construction/under renovation who will develop the property? Who will manage the property for you once finished? What are their track records? Are the rental income projections realistic/proven and in line with the local market? Which universities are nearby to the property and are they likely to recommend their students this accommodation?
The list of questions we would recommend asking stretches well beyond this and we would suggest reviewing and requesting additional information on any project before purchasing. For those wanting to Learn More about the Student Property Investment market you can contact us in the UK and UAE to discuss further.
As the article below highlights there is an argument to shows the sector as the best performing property investment asset class in the UK currently and therefore one that property investors should at least gain a better understanding of.
Investment in student housing more than doubled last year as it emerged as a relative safe haven.
A record £2.7bn was invested in 2012, a 125pc increase on 2011 according to property agent CBRE. This was despite the number of applicants for the 2012-13 academic year falling 6.6pc to 653,600 according to UCAS figures.
“Although the number of student applications and acceptances fell in 2012, capital committed to the sector has grown dramatically over the last 12 months,” said Jo Winchester, head of student advisory at CBRE.
“The marker is increasingly dominated by specialist student funds and developers, who are deploying large amounts of capital in the regions as well as within London, making student accommodation a healthy sector nationally.
“As an investment, student accommodation is relatively low risk and provides a secure income. Occupancy levels remain high, especially when compared to the vacancy rates in some mainstream sectors, and most university towns remain under supplied.”
Demand for investment in student housing has been strong across the UK, with investment in the regions outpacing London in both 2012 and 2011. Investment is student accommodation has risen sharply over the past three years, during the worst financial crisis since the 1930s.
The jump in investment in 2012 followed a 53pc increase in 2011, and 124pc in 2010.
According to CBRE, student housing is strongly outperforming other property asset classes. Last year, it delivered total returns of 9.6pc for investors, compared with 4.4pc for all office properties and 2.2pc for all retail.
Source article published in The Telegraph Jan 2012.
What should investors consider when assessing property assets for investment?
Property is a popular asset class offering secure ownership of a physical asset providing for an effective hedge against inflation with ongoing rental income (or yields) and potential for capital appreciation which is realised on resale or refinancing.
Physical property and land have been associated with wealth and prosperity for many years and are widely recognised as a crucial part of an well diversified investment portfolio. This asset class proves very popular with investors as the concept of owning and renting property is widely accepted and recognised as a sound medium to longer term strategy.
When selecting property investment assets it is important to consider the macroeconomic and microeconomic environment of the country where the property is located to aid in carefully evaluating the balance between realistic yields and capital values. Many investors have been drawn into booming property investment markets focusing on the capital growth and lifestyle appeal so to make quick profits or to “flip” units for short term gains leaving rental income through yield (and the realism of achieving those yields through supply and demand) as a secondary concern.
A number of property investors have suffered during the financial crisis which began to manifest in 2007. In many locations this has lead to significantly reduced capital values. Many property investors have found themselves involved in off plan property development projects that either have shown the developer to be under capitalised and in financial distress unable to complete the project, or find themselves holding properties in poor locations which lack sound infrastructure for further economic development or real rental demand, therefore not providing for a realistic and sustainable level of ongoing return or potential for capital growth for many years to come. Limiting factors such as these effectively reduce the overall value of property assets.
When considering any property it is crucial to examine the fundamentals behind the offer and consider the balance of risk against reward. Gower & Mae Investments will only consider property investments in countries and locations believed to offer sound fundamentals for property investment, provide realistic rental yields and/or achievable levels of estimated capital growth. The majority of the properties that are offered by Gower & Mae are turnkey and investment based development projects which can suit property investors seeking rental income and provide for fully managed property investments.
All the properties on offer are purchased through legal contract with a form of third party professional management service available either with onsite rental management structures or full property maintenance facilities in place so to ensure the property is maintained and efficiently ran to generate ongoing rental return. Owning property in this way typically involves reduced or little input or involvement from the owner however investors must ensure they understand the costs involved in the ongoing management of there property investment. Rental payments are made directly to owners via the management company in most cases.
When looking at the market for property investments there are many different options available to choose from including: Buy to Let, Hotel Room Investment, Below Market Value (BMV), Leaseback Schemes, Sale and Rent Back Schemes, Commercial Property, Off Plan Developments, Accommodation for Students and Student Investment Property, Care Homes, Repossessions, Fully Managed Properties and Resort Property to name just a few.
The team at Gower & Mae look to source the best property investments and rental income opportunities within the market and deliver them to our clients through clear and informative methods that highlight why we feel the property represents a real opportunity. Feel free to contact us today to find out more about our products and services.
Housing is not a short-term investment like cash, bonds or equities – placing it in a ‘liquid fund’ won’t change this.
An interesting article that backs up what the team at Gower & Mae feel about property. Investing in well located individually owned property investments with sound local demographics and economic factors can offer those seeking alternative income streams through property ownership a sound medium to long term income and growth opportunity.
As property investors ourselves we discuss and review many different locations and properties in the UK and overseas on a daily basis, it is evident currently that many developers and property organisations are looking to package properties in more innovative, elaborate and complex ways to attract investors.
One such example is buying into a property fund or pooled income structure. Property investors place typically smaller amounts of capital into a structure that collectively uses these funds to fund property ventures. Some may argue this type of investment can reduce individual risk for a property investor and allows for less capital exposure which depending on the offer can sometimes be the case.
The below article serves to act as a good overview as to why structures like this can sometimes not offer the property investor the best solution.
As well as ensuring you are dealing with FSA authorised companies and individuals who have the required regulations to discuss and place your funds into such products other important points to consider are, where will investors money be held and by whom? Are there any insurances against abuse of this money? Who makes the decisions to invest the money collected from individual investors? What is the track record of the manager or company advising the fund (usually provided through professional references, CV of key personnel etc), understanding the terms of the property investment especially when it comes to exit scenarios e.g does a majority need to decide on an exit thus removing any decision making from you over your investment in property?
We still believe that for those that can afford individual ownership of property assets which can then be marketed for rental thus providing an income this is a far simpler (and owner controlled) approach when considering property investment.
We stand by our beliefs that individual property investment can be especially effective when considered over the medium to longer term for income and capital growth.
Can housing ever be a liquid investment for those looking to attract new money into the sector?
Housing is not and never has been a liquid investment. Simply putting property into an apparently liquid wrapper does not turn it into a liquid investment.
Residential property has been a notoriously difficult asset class for investors, with most investors only exposed to the property market through buy-to-let homes. Owner-occupied housing, by definition, has been the preserve of homebuyers – not investors.
But investors are increasingly seeing the benefits of investing over the long term in residential property, which include its low volatility compared to equities and its ability to help diversify portfolios.
We carried out research with 375 independent financial advisers (IFAs), which found that more than a third were expecting increased interest in UK residential property investment in 2013. This forecast builds on growth in 2012 with a quarter of IFAs reporting a rise in clients investing in UK residential property other than their home in the past 12 months.
Nearly two thirds of advisers believe access to UK residential property would help investors with pension planning, but two out of five are concerned that the minimum amount required to invest in residential property, typically a deposit, is a major barrier. Almost a third of IFAs invest in UK residential property themselves, excluding their own homes.
Housing is not a short-term or liquid investment like cash, bonds or equities and this will not change just by placing it in a liquid fund. The reality with property funds is that investors tend to move in unison, trying to sell when prices turn downwards, at which point they are locked in. The idea that an open-ended fund can somehow make illiquid assets liquid is misleading, as anyone who tried to sell a holding in a commercial property fund during 2008 will be aware.
Last year was London’s year for property as well as for sports and pageantry. Even as the IPD index for commercial property valuations showed consistent declines, West End real-estate companies posted high single-digit portfolio growth. Their shares performed even more strongly, in some cases rallying to within a whisker of their 2007 peaks. For the capital, it is almost as if the 2008-09 property crash never happened.
Or is it? Some investors might be inclined to take profits, on the basis that the optimism surrounding London property seems at odds with the broader economic environment, which ultimately drives commercial property needs. Indeed, that’s the case we made for the wider UK commercial property sector back in September.
Yet we’re inclined to be more bullish on the pure West End players. Share prices are unlikely to make the kind of exceptional gains they did last year, because they already trade substantially above book values. But there’s no reason why book values cannot continue to grow at last year’s rate, rewarding patient investors over a three-year holding period.
The main reason London property has been booming has been the unparalleled level of interest from overseas investors, particularly big pension funds. This theme is as true of the commercial markets as of the housing sector, which tends to receive more press attention. A Malaysian consortium bought Battersea Power station last June, but Malaysian investors also bought offices such as 10 Gresham St in the City and are rumoured to be bidding for an £800m business park in Chiswick currently being sold by US private equity group Blackstone.
UK property market increased £57 billion in 2012
London Property prices had major effect in reversing the £124 billion fall in 2011.
The total value of all homes in Britain grew £57 billion during 2012, bringing the combined value of Britain’s residential property stock to £5.963 trillion at the end of December, up 0.97 per cent from £5.906 trillion at the end of 2011 according to the latest data from property website Zoopla.co.uk.
The 2012 increase in property values brings the total British market value back to the same level as at the end of 2009, following a gain of £67 billion in 2010 but a fall of £124 billion in 2011. The total market values were calculated by Zoopla.co.uk by combining the estimated current market value of every individual home in Britain.
Property values in England fared much better than Scotland and Wales during 2012, with the overall value of the residential property market in England growing by £64.8bn (1.2%), while falling by £1.2bn (-0.3%) in Scotland and by £6.6bn (-3.1%) in Wales.
Two thirds of the biggest 250 urban areas in Britain experienced increases in total property values in 2012. Among the 20 largest cities across Britain, the biggest gainers in 2012 by total increase in value were London (up £42.4 billion), Bristol (up £2.3 billion) and Edinburgh (up £922 million). The biggest value losers over 2012 were Sheffield (down £286 million), Doncaster (down £160 million) and Stoke-on-Trent (down £149 million).
Lawrence Hall of Zoopla.co.uk said: “These figures highlight the varying performance of the property market in different regions around the UK last year. While some areas saw decent growth in property values, others are still facing an uphill struggle.”
London commercial property investment ‘highest since 2007
The commercial property market in London enjoyed a strong year in 2012, with investment reaching a five-year high.
According to a recent report from Cushman & Wakefield, the sector saw £12.57 billion worth of Central London transactions over the course of the year. The figure represents a 25 per cent increase on the £10.9 billion total recorded in 2011.
Overseas investors made up significantly more commercial property transactions towards the end of the year, accounting for 70 per cent of City commercial property transactions by the fourth quarter of 2012.
Bill Tyser, head of City investment at Cushman & Wakefield, commented: “With continued macro-economic political unrest and the secure nature of freehold investment property in the UK, coupled with a relatively weak pound and our transparent and easy access into the property market, it is likely to ensure this international interest will continue into the foreseeable future.”
Among the major transactions that took place were the sale of St Martin’s Court, Paternoster Square and London Wall. The former was sold by Legal & General Investment Management to Oxford Properties for £110 million, while London Wall was sold to Invesco on behalf of China Investment Corporation for £245 million and has been occupied by Deutsche Bank.
To launch into 2013 Gower & Mae are pleased to announce the introduction of an exciting property investment project in Turkey. The development is located in Istanbul and offers residential properties from just £39,000 across a selection of Luxury 1 & 2 bedroom apartments. Entry level apartments are offered with an 8% rental guarantee due to the strong rental demand in the local market.
The market in Turkey and especially in Istanbul is attracting a lot of attention currently and we have seen investors making significant gains on well placed property investments in Turkey.
The developer of the S Towers Project states
“the market in Istanbul is currently very buoyant. We have seen sales in our S Towers project increase rapidly from launch and expect the prices of the apartments in the development to increase by over 20% by the time completion is reached. The project will provide a community style residence to this area with a range of public and private facilities, it is a very exciting project.”
Property for Sale: 1 & 2 bedroom apartments
Investment Amount: 1 bedrooms from £39,000*, 2 bedrooms from £92,000
Estimated Rental Yield: 8% Guaranteed per annum plus capital appreciation
Exit Strategy: Buoyant secondary market in one of Europe’s most consistent performing property capitals
Contact us for further information on the project and current availability.
Investors prefer property
Will an increase in direct investment from institutions and funds cause growth in targeted hotspots read the article below about property investment to see what the Financial Times thinks.
Direct investment in real estate markets by pension funds and property sovereign wealth funds is set to double over the next decade, according to Jones Lang LaSalle, the property consultancy.
The findings follow a recent JPMorgan Asset Management study which found that 43 per cent of institutional investors were experimenting with real assets. The study, conducted last year, surveyed 2,500 institutional investors with assets of $7.8tn.
David Green-Morgan, global capital markets research director for JLL, says it is aware of a growing number of pension funds and SWFs that are considering making allocations to real estate for the first time.
Investment flows thus far have been concentrated in three cities, London, New York and Hong Kong, prompting concerns that a pricing bubble is forming in the “super prime” office and retail properties that are widely desired by pension funds and SWFs as a match for their long-term liabilities.
“Even in those countries where the broader economic outlook is challenging, the sheer weight of investor interest in ‘blue-chip’ or ‘super prime’ properties is continuing to push values up and there is a danger that yields will compress to uncompetitive levels,”
Whats in store for the property market in 2013?
The below article provides commentary on the UK property market and highlights London yet again as a target for property investment especially from overseas investors. Interestingly another comment in the article points to the rental level paid by overseas students who seek to live in their own private property which averages at just under £39,000 per year.
What are your predictions for the property market in the UK for 2013? Read on below to see what the Telegraphs opinion is.
Eco homes, Generation Rent and homes that earn their keep. Its time to find out what awaits the property sector this year.
In 2009, Luca and Lavinia Martino bought a classic Victorian terrace house in Clapham, south London, for £717,000. Now they have offered it for sale at £1 million and have had four or five viewings in the first week.
They are among the many accidental property millionaires created by the strange times we live in.Other sellers may struggle, and the number of sales may be only a third of what it was in the boom, but people who have bought in certain “micro-markets” continue to do well. The Martinos have both worked hard to pay for their house, he in the financial sector and she as a maritime engineer. They employ a live-in nanny to help with their two girls, Daphne, 4, and Lucrezia, 2. Space is tight and they want something bigger. “We need to cash in now and invest more in another house,” says Luca.
Does the property market here seem crazy compared to Rome, where they come from? “Prices are about 25 per cent higher than in Rome,” says Luca. There is talk that London is overheating, but international money continues to flow and some sellers are hanging on to their city assets rather than moving to the country where the doldrums may lurk.The recent census says it all. Home ownership has dropped to 64 per cent of the population and private renters have increased to 15 per cent, affected by the high prices and the need for large deposits.
In central London, international students are vying with bankers for flat rentals. One company reported that 37 per cent of its properties go to bankers, while 29 per cent go to students from around the world, paying an average £32,805 per year. One-bedroom and studio flats are the “hardest-working” sector of the market.
Student housing is top property asset according to the Financial Times
Here is a good article that shows the thinking from institutional investors and investment funds with regards to student accommodation. The asset has had a incredible rise in prominence over the past 10 years and it looks set to continue its popularity as Student Accommodation maintains the interest from investment groups.
Gower & Mae will be launching a number of new buy to let student property projects to market over the year, contact us to get information on these opportunities today.
Student housing has emerged as the best-performing asset in the US and UK property markets, according to figures published on Monday that show the sector generating double-digit returns on the back of strong rental growth.
In the UK, student housing funds have returned close to 12 per cent since the start of the year, compared with 1.2 per cent for all property, 8.2 per cent for equities and 4.9 per cent for gilts, according to data of IPD, the benchmark property index. The top performing US funds, meanwhile, are generating between 30 and 35 per cent, according to Jones Lang LaSalle, the property consultancy.
The student housing sector has ballooned from a fringe investment 10 years ago to a global market worth $200bn today.
The growth has been underpinned by a rise in the number of students enrolling on university courses, up from 98m in 2000 to 165m last year.
Philip Hillman, director of student housing and higher education at JLL, said: “Not so long ago, investors looked at student housing as an alternative property type. It is hard to justify that now, as it is becoming a must-have investment for most large funds.”