As the latest survey from the Royal Institute of Chartered Surveyors (RICS) reveals a surge in demand for UK property and the fastest rise in house prices since their peak 7 years ago, we take a look at what's happening in UK property.
RICS aren't alone in claiming that investors are clamouring to return to the property market, this month's London Residential Review produced by Frank Knight showed that international investors are driving investment in prime residential property.
What's the attraction for international investors?
For overseas investors, the weak pound and low interest rates have driven capital growth in house prices considerably. Taking into account currency fluctuations, Knight Frank are predicting double digit growth in capital for investors from Europe, USA, Middle East and Asia. For sterling investors, the anticipated growth is 26%. Somewhat better than the meagre rates being offered on cash right now!
Is it just London?
RICS said that although London and the areas around it continued to see the biggest price increases, every region saw prices rise. July saw an acceleration in the housing market recovery that has been running for some time.
"Significantly, this growth was seen in each and every part of the UK as the recovery, initially focused in the south-east, spread to regions across the country."
RICS particularly saw growth in the West Midlands and the north-east, areas which have suffered more than most since the market crash.
It's not unusual for us to see our clients achieving double digit income returns on residential property investments, one recent client even expects to receive an income of 15 - 18% from his buy-to-let!
What about commercial property?
Colliers International also see sustained growth and returning investor confidence in the commercial property market. In their Real Estate Investor Forecast, Colliers predict steady income returns as well as 0.5% rental growth and 3.4% capital value growth. Again, international buyers are playing a major part in the UK commercial property market and they are venturing beyond London to the regions in search of yield.
Dougie Lawson, of Lawson & Partners, a property investment and asset management consultancy practice says that "there are many opportunities available for investors to diversify their portfolio. It is possible to buy an "institutional grade" investment property for less than £1m and with less than £0.5m with debt".
Notably, we have recently acted for a number of investors, together with Lawson & Partners who have purchased commercial investments from Lateral Property Group, who are one of the UK's most active developers of food stores, retail units and restaurants.
Steven Redgrave, Managing Director of Lateral says that "we have achieved notable success, completing 34 development projects in the food store, retail and leisure sectors in the last four years and we have a substantial forward pipeline".
Specifically, Lateral has completed and sold 16 convenience stores in the UK with 8 more due to complete this year. The stores are pre- let to Tesco, Sainsbury's or Morrisons, generally on 20 year leases with upwards only reviews, pegged to RPI. A current example as illustrated is a Tesco Express which is under offer at 6.25% in Peterborough off an initial rent of £47,500.
So, how are we helping property investors?
We're on the ground here in Channel Islands and can help you or your clients with the entire process of buying, selling and refinancing UK property. We have a really strong network and can also introduce you to key people, whether that be agents, surveyors, or property tax accountants to make the entire process absolutely seamless. As people who love property, we're always happy to talk all things property with you.
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