UK INVESTMENT
Good Reasons
12to Invest into the UK
Cash flow properties abound
BY DREW HOOK
The United Kingdom( UK) has always been the first market South Africans have turned to with great success. Here are twelve reasons why we think the UK is a great investment destination:
1 Economy
The United Kingdom is the 5th largest economy and one of the most stable in the world. The economy is dominated by the service sector and then followed by aerospace, pharmaceutical, automotive, oil and gas sectors
2 Currency
The Pound Sterling is the 3rd largest reserve currency after the US Dollar and Euro and is regarded as one of the strongest currencies in the world. London is the world’ s capital for foreign exchange trading
3Affordability of housing House prices across England on average are 6 to 7 times the average annual salary. For targeted investment areas, the house price to annual income ratio varies between 3 to 5 times.
4Interest rates The Bank of England controls the interest rates, which are in the lower 15th percentile when compared globally. Interest rates indicate the cost of borrowing related to a property investment.
5 Funding ability
The funding market can be described as investor friendly, where investor and development finance is readily available. Non-resident finance is limited.
However lending rates and terms are more preferential for resident investors.
6 Employment
United Kingdom unemployment levels vary between 6 to 7 percent of the working population. This is on par with other developed economies such as United States of America and Australia. This creates a unique social housing opportunity for landlords given the housing benefit scheme in the United Kingdom.
7Housing demand The United Kingdom Parliament forecasts a shortfall of 250,000 properties per annum, which will ultimately increase property prices within the United Kingdom over the next 10 years.
8Rental demand 36 % of the housing market is tenant occupied. Over the past 10 years, 90 % of the new available housing stock built in the market has been tenant occupied. Rental demand is driven from both professional and social housing tenants.
9Rental yields Rental yields vary from 3 % to 20 % across the United Kingdom and are dependent on the investment strategy, area and type of property. Experienced property professionals can expect a rental yield between 10 to 20 percent per annum.
10 Cash flow
The differential between high rental yields and the low of cost of borrowing creates an exceptional and unique opportunity to generate positive
44 DEC / JAN 2017 SA Real Estate Investor www. reimag. co. za