Big Money Deals

Unless you have been living under a rock, you are likely to have read or been following up on the developments of Brexit — the impending divorce between the UK and EU is inevitable.

With an extension at least till April 12 and pundits speculating on the possibilities of the UK going with a deal or no deal, it’s anyone’s guess right now on what is likely to happen.

When news of the Brits voting to leave hit the stands, investors decided to take a wait and see approach, resulting in subdued demand in the property market, especially in London.

However, CSI PROP saw this as a silver lining for investors: the weak pound has drawn in global investors, despite the uncertainty created by the referendum. In fact, many institutional investors from the Asia Pacific were quick to latch on and invest in some of the best commercial properties in the UK.  

THE WALKIE-TALKIE

Hong Kong-based food company, Lee Kum Kee Group made their first purchase out of Hong Kong and China when they bought over 20 Fenchurch Street in London.

The office tower, better known as the ‘Walkie Talkie’ due to its to the structure, was bought at £1.3bil — the highest price ever paid for a single building in London!

The 37-storey ‘Walkie Talkie’ is the sixth tallest building in London. Lee’s property investment arm, Infinitus bought over the tower from Land Securities Group and the Canary Wharf Group.

LKK Health Products Chairman Sammy Lee in a press statement said,  “The acquisition enables the Group to not only achieve a reasonable return from rental income but also extend its property portfolio to a major overseas financial centre for sustainable and stable capital appreciation.“As such, the property will be held by the Group as a long-term investment.”

Thomas Lam, Head of Valuation & Consultancy at Knight Frank shared that good  investment deals were mostly above HK$ 20bil in Hong Kong.

“The weaker pound, which has fallen about 20 per cent from the peak, now makes London property more affordable,” Lam added.

THE TOWER OF CANARY WHARF

Another Hong Kong-based company, the Cheung Kei Group made their second investment in London when they acquired an office building in Canary Wharf for £270mil.

Cheung Kei made their debut into the London property market in June 2017 when billionaire Chen Hongtian bought over 20 Canada Square in Canary Wharf for £410mil. This marked the biggest real estate acquisition in the financial district since 2014!

Sensing the opportunities ahead due to the slumping value of the pound, Asia Pacific investors have since flocked into the London market. According to CBRE, Asian investors contributed a total investment of £4.8bil in Q3 2017.

LONDON’S STOCK EXCHANGE TOWER



The former Stock Exchange Tower in London’s Square Mile was bought over by City Developments (CDL),  a Singapore-listed company, for £385mil.

Blackstone, the previous owner of the building had acquired it for £320mil in 2014.

The 27-storey tower, located near the Bank of England, is CDL’s second investment in London, following a £183m transaction in September 2018 for Aldgate House.

“We have confidence in the long-term fundamentals of London as a global financial hub with a robust office market. The short-term uncertainties surrounding Brexit have presented us opportunities to acquire assets with deep value,” said CDL’s Group Chief Investment Officer Frank Khoo.

CHEESE GRATER

The Leadenhall building, or better known as the “Cheesegrater” due to its wedge shape was bought by CC Land, a firm run by Chinese property tycoon  Cheung Chung-kiu.

CC Land, which also owns an office building at Canary Wharf, bought over the Cheesegrater from British Land and Oxford Properties for  £1.15bil — one of the largest property deals to be made in London.

BATTERSEA POWER STATION

Two Malaysian state-backed funds, Employees Provident Fund (EPF) and Permodalan Nasional Berhad (PNB) bought into the iconic Battersea Power Station in London. Developed by Battersea Power Station Development Company (BPSDC), the building was purchased for  £1.583bil —- making it the biggest property deal carried out in the UK.

Battersea Power Station was previously owned by SP Setia and Sime Property, before they disposed of their stake to PNB and EPF.  “They have acquired the commercial assets in the Power Station through a joint venture, of which they own 65% and 35% respectively” SP Setia said in a statement.

The iconic building, built in the 1930s was left in a derelict state for decades, before restoration work began in 2014.

A statement issued by PNB said, “It is currently being restored and will, on completion from end-2020, become home to hundreds of shops, restaurants, cafes, event spaces and cinemas as well as new homes, Apple’s London campus and business members club No18.”

A SILVER LINING FOR INVESTORS

These sales reiterate that the interest in UK properties remain strong, despite Britain’s vote to leave the EU in 2016. With Brexit just weeks away, the UK’s economy is likely to be in limbo for a while.

Savvy and smart investors should take heed of these institutional investors and leverage on the weak pound for attractive investment opportunities in the UK.

The Queen’s Pick

Here’s a bit of trivia: Did you know that HM Queen Elizabeth’s personal fortune is estimated to be worth up to £360m? We take a peek at the properties belonging to the world’s longest-reigning living monarch.

Some of the most aristocratic people of all time are the monarchs of England. The royal family, which traces its origins as far back as the 10th century, is the embodiment of some of the strongest empires the world has ever seen.

Like the game of Chess, which is modelled after the British royal family, the UK is one of only two kingdoms in the modern world where the Queen holds the highest form of authority.

As the Sovereign of an enormous empire that has historically conquered most parts of the world, one has to wonder: does the longest-reigning Queen have investments of her own?

The short answer? Yes, she does. The sovereign can own real estate in several ways — through the Crown and, privately, through the Royal Family.

The Crown Estate

The Buckingham Palace. Source: Independent

The Buckingham Palace. Source: Independent

A vast number of land in the UK known as the Crown Estate is owned by the Crown where it belongs to the reigning King or Queen. This property is usually run by independent organisations that the monarch hires.

An interesting fact is that any profit or yield that comes from these properties is directed towards the government treasury. However, the Queen receives 25% of the revenue generated from the Crown Estate in the form of a Sovereign Grant, which is used to fund her official work and the maintenance of her residences.

Many of the royal palaces and parks are owned by the Crown. According to the Land Registry, the Crown owns land in approximately 217 out of 342 districts in England and Wales — that is about 7,936 plots!

The Queen’s Collection

The Queen also has properties that she owns personally. The privately owned properties of the Queen can be divided in the form of two duchies: The Duchy of Lancaster and the Duchy of Cornwall. Some of these properties include grand hotels, iconic race courses and historic castles.

The Duchy of Lancaster, a 18,433-hectare estate, holds a number of historic properties, including the Lancaster Castle in Lancashire and Pickering Castle in Yorkshire. The Duchy generates an approximate annual income of £18m which is paid directly to the reigning monarch.

Lancaster Castle in Lancashire. Source: Business Insider Malaysia

Lancaster Castle in Lancashire. Source: Business Insider Malaysia

A major part of the Duchy of Lancaster is the Savoy Estate, located in central London. It is home to one of the world’s most luxurious and exclusive hotels — the iconic Savoy Hotel. The Duchy had a net worth of £519m and delivered a net income of £19.2m in 2017.

The Duchy of Cornwall consists of 53,000 hectares of land in 23 counties, mostly in the southwest of England. The Isles of Scilly and Dartmoor, which includes Highgrove, the private residence of the Prince of Wales and Camilla, are among the properties that fall within the Duchy of Cornwall. Unlike the Duchy of Lancaster, revenues generated are passed on to the heir of the throne — Prince Charles (currently).

Beyond the Duchies

Beyond the bounds of the duchies, The Queen also has a number of private properties located in Greater Manchester and its surrounding areas. These properties are worth billions.

Here are some of the properties owned by the Queen herself in areas within and surrounding Greater Manchester:

Altrincham Retail Park, Broadheath, Trafford
Altrincham Retail Park, Broadheath, Trafford
Part of Cheshire Oaks Designer Outlet
Part of Cheshire Oaks Designer Outlet
Oldham County Court
Oldham County Court
Chester Castle
Chester Castle

Manchester’s staggering development and rising population growth makes it an attractive place for investors looking for the next big thing to invest. Property, in particular, is a secure choice as the demand for housing in the city continues to grow.

This adds to the numerous indisputable reasons why investing in UK property now is a smart investor’s move. From profitable returns, lucrative rental yields and the more affordable pound, property in the UK is a viable opportunity for anyone looking for a promising prospect to plonk their pennies.

Birmingham, the next ‘LONDON’?

Urban regeneration has transformed Birmingham into a big capital city
Urban regeneration has transformed Birmingham into a big capital city

As the world progresses into a new era and populations grow, cities, too, will evolve, transforming from nondescript outer suburbs into big capital cities, like Manchester, Liverpool, Birmingham – even Kuala Lumpur. Infrastructural growth is the main catalyst for the changes that attract migrants, causing an increment in population numbers. Thus, small cities become capital cities.

In the UK, some of the most exciting cities today in terms of population, job and infrastructural growth are Birmingham, Liverpool and Manchester.

Research compiled by Centre for Cities cites Birmingham as the second fastest growing city after Liverpool from 2002 – 2015, increasing from 9,800 to 25,800 people — 7 times faster than London over the same period. This is impressive, given how London had completely eclipsed Birmingham in the past. How the tides have changed!

Knight Frank reports that the number of people living in Birmingham will rise by 171,000 to a total of 1.3 million people by 2039, especially with the expansion of the HS2 high-speed rail line being built in central Birmingham and nearby Solihull, followed by other regeneration projects.  A sweet enticement to new investors indeed.

Birmingham: One of the Best Performing Cities in England & Wales

In the face of this renaissance, this booming city, also fondly known as “The City of A Thousand Trades” maintains its status as the heartland for British industry. The growth of the motor car as well as manufacturing continues to support the industrial sector in England and Wales,  creating more job opportunities and attracting more people — many of whom have relocated from London.

Between 1998 and 2015, job growth in Birmingham hit 30%, representing around 30,600 jobs in total.

Biggest Growth in City Centre Population & Jobs in England and Wales

Source: BirminghamLive
Source: BirminghamLive

However, despite the massive development and job growth, Birmingham is facing a shortage of housing. Between 2011 and 2016, only an estimated 8,000 new houses were built, whereas the actual demand was around 20,000.

The latest data by Hometrack shows that Birmingham is at the third place of house price growth in England, after Manchester and Liverpool, whilst London remains at the bottom.

Manchester clinched top spot at 7.4% growth, followed by Liverpool at 7.2%, and Birmingham at 6.8%. London stayed somewhat flat at only 0.7%.

The average price in Birmingham was at £161,200, slightly lower than Manchester at £166,100, and Liverpool, at £121,900.While price growth in London has been static, house prices there are more than double the national average at £494,800!

Source: Hometrack
Source: Hometrack

Clearly, cities in the Northwest received high capital gains over the last 12 months, yet there is still much room for growth.

Source: Hometrack
Source: Hometrack

The outlook for the housing market in Birmingham appears rosy, thanks to its economic growth thus far.

The region’s strong performance is mainly attributed to its manufacturing sector. In 2016, manufacturing made up 11% of employment in Birmingham, compared to the average for UK cities of 8.8%.

Due to costly house prices, as well as lesser employment opportunities, many Londoners, especially millennials, are relocating to Birmingham,and the other booming cities of Manchester and, Liverpool .

Ultimately, urban regeneration has played a vital part in these cities’ transformations, influencing the movement of millennials towards greater opportunities such as education, jobs and employment options. Savvy investors are starting to see the opportunities in store for Birmingham. Are you an investor? Are you thinking of making your money work for you? Then then you don’t want to miss out

Image source:

Hello Manchester, Farewell London!

Saving hard, but you can’t quite put aside  enough? Thinking of putting your money to work by investing in UK?

Here are 4 things you should know before deciding where to invest. Invest in property located in areas with

  • Stronger currency
  • Stronger and stable economy
  • Rapid job growth
  • Vast education opportunities

This impacts the returns on your investment apart from increasing the value and ‘rentability’ of your property. Capital growth is also key to property investment. The greater the growth in property value,, the bigger the total profits.

UK has always been a haven for property investors. But, as London property prices soar higher and yields go lower, property in the cities outside London are showing greater yield potential. The Brits, too, are starting to show interest in properties outside of London.  Indeed, it is now the regional cities in which you should put your money! Before you decide where to invest, take a quick a look at HSBC’s annual research on rental yield around Britain. Thank me later.

The data shows Manchester leading the pack in rental yields, as well as several other locations with profitable returns.

But if it’s only London property for you, you might find this link helpful: http://bit.ly/1J5P4co

 

Property Investment: London Falls & Regional Cities Rise

In September 2017, it was reported that London house prices had fallen for the first time in 8 years at a record drop of 0.6%. The capital was subsequently deemed the weakest performing region in the UK for the first time since 2005.  

According to recent news from Acadata, house prices in London continue to plummet, extending a slump that’s seen the average property in the capital lose almost 2 percent its value over the past year.

It seems as if the great divide has materialized in the UK property market, separating London from other thriving cities. According to Acadata, while values continue to fall in London, they are growing in other regions apart from the southeast. Property-website operator Rightmove has released fresh data that supports the claim of major regional growth, showing that average prices have climbed to a new record of  305,732 in April, despite a drop in London. The shifting power dynamic in UK’s major cities is becoming apparent, as efforts in expanding housing, jobs, resources and investment are becoming increasingly concentrated in areas outside the capital.

Javad Marandi, a British businessman with investments in commercial and residential real estate points out what is increasingly becoming obvious: “The best regions to invest in lie outside the capital – it’s no longer all about London.”

London Is Falling; So, What’s Rising?

Various lists claiming the emergence of “the next London” have penetrated the news, using undersupply and rental yields to gauge where, exactly, business in the UK property market is shifting. What investors know when it comes to such lists, is that repetition should lead them to the right places to invest their money.

Matt Stevens, Director of The Mortgage Genie, has recently shared that the buy-to-let hotspots set to offer the most competitive returns in 2018 are Manchester, Liverpool and Gateshead. Similar results were recorded in a more recent report released by JLL, which has singled out Manchester, Liverpool and Leeds as the “ones to watch” over the next five years, as it expects them to outperform other cities in the UK. The two constants found in both reports should signal to investors the immense potential in the northern UK region.

Manchester and Liverpool show strong price growth towards the end of 2017, which has continued into 2018. Image credit: https://www.thesun.co.uk/uncategorized/5222878/whats-next-for-house-prices-and-what-will-happen-to-the-property-market-in-2018/
Manchester and Liverpool show strong price growth towards the end of 2017, which has continued into 2018. Image credit: https://www.thesun.co.uk/uncategorized/5222878/whats-next-for-house-prices-and-what-will-happen-to-the-property-market-in-2018/

Manchester and Liverpool are serious players in the property market for their relevance as core cities for science and technological growth — this is partly credited towards the government’s push of the Northern Powerhouse.

Supporting Manchester’s title as ‘the Silicon Valley of Britain’ is a new report by Tech Nation, which has revealed that tech companies in the UK’s northern region have attracted investment at a faster rate than anywhere else in Europe over the past five years. Manchester particularly, was the key performer within the region, with tech investment growing at a whopping 668% over the 2012-17 period. This growth can be seen in the number of private equity firms in Manchester, which is 31 as of now, with a further three rumoured to be opening this year compared to the six to eight firms in the city over the previous two decades or so.

Liverpool also holds a prominent position in the upcoming digital age, with the establishment of the Knowledge Quarter, placing it on the cusp of becoming a world-class destination for science, innovation, education, technology and the creative and performing arts.

Recent news highlights an ecologist and astrophysicist from Liverpool John Moores University (LJMU) who, together, have made a significant breakthrough in the animal conservation scene. Dr. Claire Burke, the astrophysicist behind the new species-saving instrument, explains that the software used to identify galaxies is now being used to resolve problems involved with the tracking of endangered species!

With the northwest region boasting expansion in relevant industries, investors will find that their best bets lie in cities like Manchester and Liverpool.

Conclusion

Ultimately, the UK remains a good and safe place to invest your money due to a weakened pound and a structural housing undersupply. The best opportunities undoubtedly lie in major regional cities such as Manchester and Liverpool.

That said, it is important to note that the market in London, subject to a variety of conditions, will eventually bounce back, just as the housing market in the Midlands* bounced back from a low in 2015 to become one of Britain’s fast-growing housing markets today. On a positive note, it is during these apparent slumps that shrewd investors should invest in order to receive satisfying returns when the market bounces back.