The Top 5 Reasons for UAE Investors to Invest in UK BTL Property
For UAE investors that are considering a property investment, the UK remains a prime location. With nearly 96% of UAE investors preferring the UK during 2018, it looks like 2019 will be more of the same as a weakened Sterling opens up opportunities using foreign exchange rates.
With the ability to provide two different income streams – rental income (otherwise known as yield) and capital growth on property value – a Buy-to-Let property is a uniquely flexible investment asset. The demand for property is also vast. The population is expected to swell to around 74 million over the next 20 years and chronic undersupply in major cities means a much more competitive market.
This is critical for investors and shows that the Buy-to-Let sector is still a cornerstone opportunity – driven by high tenant demand and rising rental yields. As a specific asset class, ready-made investments can provide all of the benefits of a traditional Buy-to-Let property with more urgency – delivering immediate rental income and less initial set-up costs.
Here we examine the Top Reasons UAE Investors are looking to Invest in UK Property.
Top 5 Reasons for UAE Investors to Invest in UK Property
A key aspect of building a successful property portfolio is long-term growth. The more time an investment has to build a consistent return the better. Consider that a single £10,000 investment at 20-years-old (based on a 5% interest rate) could grow to £70,000 by the time the investor is 60. The same initial £10,000 investment made at 30-years-old would only result in £43,000 by 60.
Buy-to-Let property follows the same principle and heavily benefits from ‘compounding’ – a method of growing an investment by reinvesting any earnings. This is why time is often described as an investor’s most valuable resource.
Looking at historical data, UK property particularly has also shown the potential to double in value over a 12 – 15 year period. It’s this growth over the long-term that ensures returns can be maximised and reinvested into a portfolio.
Secure UK Market
While all investments come with unique risks and rewards, UK property has a reputation as a secure, robust market – recognised for its rental yield performance and stability. It’s this stability that makes property such an attractive prospect in uncertain market conditions. It’s no surprise that in the Time to Invest survey we ran last year, we found that property is the most ‘aspirational’ investment, with 40% of respondents saying they’d prefer it in their portfolio, demonstrating the appeal of tangible and potentially less-volatile investments for future planners.
The SevenCapital Brexit Survey 2019 further highlighted the UAE’s stance on the future of the UK market with 86% of UAE investors believing the market will be performing between ‘good to strong’ in 18 months time.
Increasing Rental Demand
Generation Rent continues to rise, bringing with it unprecedented demand across prime UK cities. In research by Direct Line for Business, over two-thirds of the 17 million renters in the UK have not purchased a property and instead opted for long-term renting.
Coupled with a chronic undersupply of property across the board and it’s no surprise that rental demand has skyrocketed. There are now five percent fewer homes to let than there was two years ago, according to the Countrywide rental index – while the UK population is expected to see a huge boost over the next 20 years.
Emerging Buy-to-Let Hotspots
The UK property market is also much more varied than it has been in the past. While London has traditionally been the go-to market for international investors, a number of emerging markets are appearing around the rest of the country.
The London Commuter Belt, for example, has made huge strides in delivering an affordable alternative to the capital. Areas such as Slough and Basingstoke are utilising exceptional transport links to generate demand amongst commuters while infrastructure projects such as Crossrail are putting these locations in the global spotlight.
While regional cores such as Birmingham have led the way for growth over the last five years, areas such as the London Commuter Belt have seen price increases of over 300% in the last 20 years, demonstrating the growing appeal they have cultivated.
Buy-to-Let property is a relatively straightforward investment process in concept but requires due diligence on behalf of the investor – researching locations, finding tenants and keeping up-to-date with admin are all vital aspects of any investment.
A ready-made investment, on the other hand, can remove all of this initial ‘hassle’ and deliver immediate returns. These investments can provide a consistent stream of rental income straight away, ensure that a tenant is already in-situ (avoiding initial void periods) and guarantee a fully-furnished apartment from the outset.
For UAE investors, these are logistical challenges that can easily be mitigated. Once a location is decided upon, it’s easy to start benefiting via a ready-made investment, removing any of the hassle and leaving a streamlined investment process.