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UK Ready Made Apartments Top Choice for UAE Investors in 2019

The rise of ‘ready-made’ or pre-let opportunities in the UK is a trend that can be incredibly powerful for international investors. Removing most of the hassle that comes with the initial stages of property investment, uk ready-made apartments are low-maintenance and provide immediate benefits.

Key Findings:

  • PRS set to make up 25% of the wider property market
  • UAE GDP growth accelerating to 2.9% in 2019 thought capital growth and rental values expected to drop
  • UK rental yields have slowed but can still provide averages between 5 – 7%
  • The largest amount of mortgage enquiries for the UK in 2019 originated from the UAE

The rise of ‘ready-made’ or pre-let opportunities in the UK is a trend that can be incredibly powerful for international investors. Removing most of the hassle that comes with the initial stages of property investment, ready-made opportunities are low-maintenance and provide immediate benefits.

The UK market remains incredibly popular with UAE investors even post-Brexit. Prior to 2016, 89% of respondents to the SevenCapital 2018 Brexit Survey cited investments in the UK. By the end of 2018, the number of property investors based in the UAE has declined but an overwhelming majority (96%) still have the UK as their preferred investment destination.

With relative stability and the opportunity for UAE investors to stretch the value of their money against a weakened Sterling, finding a ready-made investment opportunity in a prime UK location is the chance for international investors to start reaping immediate benefits.

Below we explore the trends that are shaping the UK property market and how UAE investors can take advantage of a ready-made investment.

UK Property Investment Trends

For international investors that want a secure and consistent investment, property remains one of the most popular assets available. The UK’s Buy-to-Let market is huge – worth nearly £1.29 trillion – and provides a flexible and profitable investment that can be adapted to multiple strategies.

Tenant Demand
Experts anticipate that the private rented sector (PRS) will grow to make up a quarter of the wider UK market in the next five years, making it easily the fastest growing property sector in the country. As affordability issues and a chronic undersupply of properties continue to affect the market, ‘Generation Rent’ is growing in popularity.

It’s estimated that as of Q4 2018, the UK will need 300,000 new homes to meet demand. Further predictions show that UK renters will outnumber homeowners by 2039, demonstrating the strength of the BTL market as a whole. Affordability for homeowners is also causing an increase of long-term renters, with 69% of tenants expecting to be still renting in three years time, contributing to the continued rise of the PRS.

Population
With the population expected to rise to around 74 million over the next 20 years, the demand for housing is vast and many of the major ‘first’ cities are falling behind on delivering their necessary quotas. This has created an ongoing issue of undersupply, contributing to a competitive market where a successful Buy-to-Let investment can thrive. Investors would be wise to consider that the UK market is currently fuelled by incredible demand, growing rental yields and low-interest, creating a ‘perfect storm’ of investment.

Property Prices
The impact that demand has had on UK property is clearly visible in the growth it has experienced. The average price of a UK apartment has risen by £1,250 per month since 2013 – equating to an increase of nearly £75,000 over the last five years. Looking at locations specifically, Birmingham’s property sector has led the way for growth since 2016 with a 16% rise.

With affordability issues meaning renting is cheaper than purchasing in certain areas over a longer-term, it’s no wonder that Generation Rent is continuing its rise.

Building an Affordable UK Market

It’s these trends that are making Buy-to-Let and ready-made investments such a popular asset class with international investors. The chance to start maximising returns from prime, over-performing locations with very little hassle is ideal for overseas investors.

According to the research by Skipton International – the largest proportion of mortgage enquiries for the UK in 2019 originated from the UAE. As domestic buyers continue to delay completing their investment, international investors have been given a clear pathway to success.

Hannah Aykroyd of Aykroyd & Co, a buying agent based in London, believes this renewed interest is occurring for several reasons: “We have had clients flying in from Asia and the Middle East… she said.

“House prices in prime areas are down about 30pc since the 2014 high. Combined with the weak pound, this means some buyers – such as those from America – are looking at an effective discount of over 50pc. The weak pound is a strong motivator to buy now.”

It’s this uncertainty of Brexit and the subsequent ‘discounts’ that is creating an opening for international investors. The UK is a more affordable option right now but also maintains its reputation as a ‘robust market’ with the potential to offer incredible returns.

Traditional issues such as financing are also less of a problem for international investors as specialist lenders grow in popularity and high-street names look to take advantage of a market in demand. With banks like HSBC offering the same rates to both domestic investors and expats and building societies generally being more open to accepting foreign currency, there’s never been more opportunity for overseas investors.

UK Private Rented Sector vs UAE Private Rented Sector

With 2019 being a challenging year for the global economy, it’s little surprise that the UAE has felt the aftershocks. The UAE Property Report by Savills highlights that – despite UAE GDP growth accelerating to 2.9% in 2019 – the property market is expected to see price value drops. Capital appreciation and rental values have witnessed a year-on-year decline across cities such as Dubai and Abu Dhabi.

Table Showing YoY Changes in Average Annual Rent (AED)

Dubai Property Table

Source: Savills UAE Property Report 2019

The report goes on to predict that despite price compression both this year and last year, the UAE Vision 2021 Plan can start to deliver improved opportunities for domestic and international investors going forward.

This is why UAE investors are choosing the UK market right now, a market that has demonstrated upwards growth in capital appreciation and despite slowing rental yields, can still provide averages between five and seven per cent.

It’s these ready-made investments available that are attracting attention overseas, delivering immediate, impressive returns while minimising initial set-up cost and ‘hassle’. We have a number of ready-made investments available in key areas including Birmingham and Basingstoke, delivering immediate yields while benefitting from unprecedented demand.

CopperBox

Previously voted one of the ‘best places to live’ in The Times, Harborne in Birmingham represents the ultimate in high-end city suburb living. Just 10 minutes from the city-centre, Harborne offers the best of both worlds – relaxed village feels with the buzz of the city just a stone’s throw away.

CopperBox – a ready-made investment at the heart of Harborne – is an attractive proposition. A pre-tenanted, fully-furnished investment opportunity, CopperBox is a contemporary development ready to deliver immediate rental income. As one of only three dedicated apartment developments in Harborne, CopperBox is an ideal opportunity for professionals that want city-centre living with the benefits Harborne provides. Read more >

CopperBox

Churchill Place

A major destination within the South East and one of the highest performing economies in the country – Basingstoke was rated the 3rd fastest growing town in 2018. With a population of 172,000 and counting. We examine how Basingstoke has quickly emerged as a prime target for investment and the impact it’s had on the market as a whole.

Churchill Place – a ready-made investment at the centre of Basingstoke – offers pre-tenanted and fully-furnished apartments, ready to start delivering immediate rental yields. The development itself is in a prime area of Basingstoke and epitomises luxury, with contemporary designs and spacious, open-plan apartments. Read more >

Churchill Place

Dubai – UK Property Market Update

SevenCapital in partnership with Mercury FX are hosting a UK Property Market Update Seminar.
Learn more about UK property investment and leveraging currency in the current market.

Wednesday 30th October 2019, 6.30pm
Capital Club, Dubai

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