2016 was an eventful year, from the UK’s decision to leave the European Union to the election of Donald Trump as US President. Nonetheless, the property world kept on spinning, with investors adjusting to take advantage of market conditions and currency exchange shifts.
What’s in store for property in 2017? From UK hotels and US buy-to-let to Spanish holiday homes, TheMoveChannel.com asked experts to share their predictions:
1. Spain – Golden Properties
As we start 2017, Golden Properties highlights the great opportunities still available in the Spanish market.
Spanish market enjoyed healthy growth in 2016
“The Spanish market showed healthy growth last year and is one of the most undervalued housing markets in the world, according to a key benchmark by the Organisation for Economic Development, which measures property prices in relation to income. There are great opportunities to be found there and we’ve been putting a lot of focus on locating those for our clients.”
Brits will increasingly targeting budget properties
British buyers still appear active in Spain this year, but are compensating for the pound’s weakness against the euro by focusing on more affordable opportunities:
“It is yet to be clear what impact the recent devaluation of the pound will have long term on the Spanish market, especially in places like Costa Del Sol and other holiday destinations but we’ve been seeing a major increase in inquiries for Spanish properties under €50,000 from British investors. That could indicate that investors are still buying but just going for lower prices.”
Coming soon to the market…
“We’ve been working with one of Spain’s largest banks to bring excellent below market value properties with 100 per cent finance to our investors. With buy-to-let mortgages being increasingly harder to acquire and the heavy tax burden placed on investors in the UK for example, these deals offer an incredible opportunity for investors to expand their portfolio with minimal capital outlay. We’ve also been able to offer guaranteed rental agreements on many of these properties which removes most of the risk of buying properties overseas.
“This opportunity has been attracting investors worldwide to Spain, especially from East and Southeast Asia as well as Australia and New Zealand. These investors recognise the immense capital growth potential in the market.”
2. UK (Residential) – Aspen Woolf
The fundamentals of the UK housing market are unchanged post-Brexit, say Aspen Woolf.
The market’s fundamentals are unchanged post-Brexit
Supply continues to fall short of demand, which is underpinning house prices, explain the property investment firm:
“The current state is very much following on 2016. Of course we’re awaiting to hear whether the Parliament has to vote on a soft or hard Brexit, which will undoubtedly play a role in the industry going forwards, but at the moment things are moving very much in line with the end of 2016. Housing supply continues to be at a staggering low, with demand increasing yearly. That won’t change overnight.”
The pound may weaken, but it won’t affect the market more than it has
With the UK’s exit from the EU no longer a surprise, the market is already braced for the coming year:
“Dependent on the outcome in March, our currency might take a bigger hit. However, that said, the world already knows what the UK decided. It’s not going to be any new news. We all know the button will be pressed in March, so, for sure, there might be a small adjustment period in currency again, but we don’t expect it to affect the property market more than it has already. If anything, we would assume to see an increase in foreign interest due to the currency advantage they have. On the other hand, it also restricts domestic buyers to keep their property interests at home instead of buying elsewhere. For the short term, anyway. In a nut shell, we expect 2017 to remain rather similar to 2016. The real thing we are watching out for now is whether or not it will be a soft or hard Brexit.”
Housing crash is not on the cards
“We’ve witnessed an increase in foreign buyers looking to take advantage of the currency exchange rates back in 2016. The fact is the supply is at all-time ridiculous lows and the demand for housing just keeps increasing, and that won’t change over Brexit, so we don’t really see a massive housing crash imminent in the future. People in the UK will still be looking for homes and a place to live and, even if the UK does leave the EU, that won’t change. The same people will still be looking for a place to call home.”
“The Brexit has only mildly affected experienced investors looking to expand on their portfolios internationally, and those are the ones that would rather keep their money at home than risk putting it into Europe due to not knowing what the outcome of an international purchase might be to them. This, though, will undoubtedly smooth itself out as things become clearer, but, of course, people will be cautious in the start, which we’ve already seen with our domestic investors in 2016 looking to invest abroad.”
Coming soon to the market…
“We have two new projects that we’re really excited about. The first will be in Liverpool, a new residential development looking to bring back a gorgeous Grade II listed building. We love seeing projects like this and love working on them. Not only do they provide housing, but they help keep the history and story of an area alive. It’s always sad to see buildings torn down or forgotten about. This development has a real past and connection to the L3 area of Liverpool and we already know locals are excited to see it being brought back to life. We can’t wait to be able to launch it at the end of the month.
“The second will be launching a bit further down the line. It will be located down in Plymouth, which is exciting, as we’ve not had a development come onto market in that area yet. It’s an area that could really do with some modern development and has been overlooked a lot until recently.”
3. UK (Care Homes) – Fortem Global
Care homes have become an increasingly popular form of investment in the last year – a trend that Fortem Global expects to see continue in 2017.
Demand for care homes, hotels and student properties is rising
An increasing number of investors are turning to asset classes such as care homes and student properties, as the buy-to-let sector facing growing headwinds:
“2016 was a good year for investing in property. However, the UK government also made changes to the residential buy-to-let market, which has made it much more difficult for investors to achieve a respectable return. The hike in Stamp Duty Land Tax, combined with the restriction in tax relief on mortgage interest for landlords, no longer makes the residential buy-to-let market as popular a proposition as it once was.
“In the past, many clients felt more comfortable with traditional assets they were familiar with. However, with the recent changes, clients have recognised the opportunity to review and consider fresh alternatives. Clients are already seeking out property that makes their money work harder for them within alternate markets. We are seeing a shift in enquiries, with the majority now in relation to the rising alternative asset classes of care, hotel and student property. Many of these assets deliver a fixed passive income without having the drawbacks of the residential market, and the burden of property management or on-going costs.
“A major benefit to commercial assets is that they’re unaffected by Stamp Duty Land Tax. This is not payable on alternative commercial assets under £150,000; a strong reason for considering this type of alternative asset class.”
International interest will continue to climb
The weak pound will boost international interest in healthcare opportunities:
“With the current position of the pound, international interest has continued to increase. In 2017 we expect this trend to continue as momentum, awareness and confidence builds. We agree with Cushman & Wakefield, which predicts that interest in healthcare investment will grow in 2017. We have already seen many savvy UK and international investors awaken to the excellent property opportunities present in the healthcare market in 2016 due to the growing need for high-quality specialist care.
“Within the UK care sector there are some great companies innovating within the space, providing ethical, sustainable investments that deliver stable returns and capital appreciation for investors. We have several such opportunities in our property portfolio, alongside more established student, hotel and residential options. We are confident investment will continue to grow in 2017 as more investors learn about the benefits of investing in quality, well-managed care facilities.”
UK will remain a recognised safe haven for investors
The UK’s population continues to grow and, with an ageing population, demand for social care services is only increasing.
“Following Brexit, interest in our alternative opportunities increased significantly, particularly from our overseas clients. The pound has fallen against many major currencies since the result was announced, with overseas investors now able to buy more in the UK, for less.
“The UK remains both one of Europe’s fastest growing economies and the world’s fifth largest economy. Internationally, the UK is still a recognised safe haven for inward investment. This will not change. We believe that the opportunities within our most popular asset class, care, will continue to grow and perform well as a long-term asset. The UK’s population continues to grow, with an ageing population and growing demand for social care services meaning that despite the short-term uncertainty surrounding Brexit, there is a growing need for high quality providers of care.”
Coming soon to the market…
“At Fortem Global, our selection of property investment opportunities across multiple sectors reflects a balanced approach, providing a range of options to our clients that deliver respectable yields and return on investment. Within our current portfolio of care, Newton Manor and Gramont House for example, are both open and operational care home facilities that offer units which deliver an 8 per cent NET yield fixed for a 25-year term, with contracted buy-back options throughout for ultimate flexibility.
“Our latest hotel investment opportunity, The Coal Exchange, is a wonderful Grade II listed historic building in Cardiff, Wales, which is being carefully renovated and transformed into a stunning 200-suite luxury hotel, wedding venue and spa. Investors can expect to receive 8 per cent NET for the first 3 years, 9 per cent in year 4, increasing to 10 per cent years 5-10.”
4. UK & USA (Buy-to-Let) – New World Property Investment
Buy-to-let markets remain extremely resilient
Demand for capital growth and strong yields remains as steady as ever:
“Property markets in 2016 were dominated by widely unexpected political events such as Brexit – Britain’s vote to leave the EU – and the unprecedented election of Donald Trump as the next President of the United States, leaving many investors and property developers in the dark in terms of what 2017 would hold in store. However, many real estate markets have continued to perform extremely well, with demand for capital growth and strong returns on investment as sought after as ever. Operating predominantly across buy-to-let investment markets in the UK and abroad, we specialise in the sourcing of fully managed wealth-building property investment opportunities and we have noted that buy-to-let markets have proven themselves to be extremely resilient, with investors both foreign and domestic turning to the likes of the UK and USA, which they consider to be safe havens.”
Outlook positive, despite tax changes
There are a number of ways for investors to deal with the tax changes facing landlords:
“Despite the impending changes to buy-to-let mortgages and tax relief expected to come into force from April 2017, across a four-year period up until 2020, we are nonetheless confident regarding the outlook for buy-to-let investment markets over the next 12 months. The UK Government says it expects nearly 1 in 5 individual landlords to pay more tax as a result. For those investors who have or are planning on purchasing their buy-to-let properties in the UK via a mortgage, tax experts are advising of five ways to cancel out the loss of tax relief: i) Remortgaging; ii) Exploiting your spouse’s personal allowance; iii) Becoming a limited company; iv) Reassessing your holdings, selling where necessary and reducing your loans; v) Raising rents. These changes may see many investors begin to diversify their portfolios and avoid the hassles associated with traditional buy-to-let.
“Owning your properties outright is one way to avoid the impending tax hikes. Buy-to-let products such as hotel room investments and purpose-built student accommodation come as fully packaged hands-free investments courtesy of the respective developer, offering contractually fixed and guaranteed returns of up to 10 per cent per annum for an agreed-upon number of years. We also expect the demand for these ‘arm-chair’ investments to increase in popularity and become more widespread and mainstream throughout 2017 and beyond.”
US buy-to-let will be an attractive alternative to UK
Cities such as London, but particularly Liverpool and Manchester, will continue to be hotspots in the UK for 2017, while Philadelphia and Detroit will shine in the USA.
“Other investors may begin to look overseas in search of better value for money. The UK and USA markets generally speaking are both showing significant parallels in terms of a shift in the way people are thinking. Not only are there not enough homes being built to satisfy demand, but the new generation of millennials are increasingly opting for private rented accommodation as opposed to purchasing their own homes. This is causing increases in demand for quality rented accommodation as well as driving rental prices up, which is extremely positive for property developers and would be investors alike. Given the trends we are seeing, we certainly expect investor demand to rise and gain momentum in the larger metropolitan cities in the UK, such as London, Manchester and Liverpool, as well as the resurgence of historically great cities across the pond in the USA such as Philadelphia and Detroit where double digit returns in excess of 10 per cent per annum are readily available when investing in turnkey residential properties.”
Brexit may make UK more desirable to foreign investors
Domestic investors may see a more challenging year, but overseas interest is a source of optimism:
“Like many professionals within the industry we are adopting a business as usual approach. The UK buy-to-let investment market is performing extremely well, and although the London market is beginning to cool slightly, the demand and inclination of many investors choosing to invest their money here in the UK is as strong as ever. The decision to Brexit has been made and we feel that leaving the single market may in fact make the UK even more desirable to foreign investors giving us reason to be optimistic for what the future brings. Domestic investors in the UK may have a slightly more challenging year given the changes to UK tax relief and buy-to-let mortgages, but this is all the more reason for investors to plan ahead be completely on top of their finances.”
Coming soon to the market…
“We currently have a number of excellent investment opportunities in the UK, USA and even as far east as Dubai in The Middle East. A number of our most exciting projects are listed below:
1. The Dye Works, Bradford
A brand new purpose built student property investment opportunity in the heart of Yorkshire, England consisting of 165 high-spec self-contained studio apartments. Investors are invited to purchase individual rooms within Dye Works starting from just £55,000 per unit with only 50 per cent capital required upon exchange, for which you would receive assured returns of 8 per cent p/a for 3 years, as well as long term capital appreciation, with no additional fees or management charges to pay.
2. The Manor House Hotel, Hallgarth
A former 16th century residential estate, now operating as a stunning 24-bedroom hotel and wedding venue set within 4 acres of spectacular grounds and beautifully maintained gardens. Courtesy of a market-leading hotel and asset management firm, investors are invited to purchase individual rooms and be a part of this historic venue and can benefit from a guaranteed 55 per cent ROI over 5 years in exchange for a £75,000 investment.
Turnkey Residential Investments, Detroit, USA
Exceptional property investment opportunities in the form of fully renovated and tenanted turnkey properties across the State of Michigan. Our market leading partners are the number one real estate investment and asset management company in the Metropolitan Detroit area enabling us to provide UK and foreign investors with quality rental homes and excellent turnkey properties for sale in the city of Detroit and it’s surrounding suburbs. Our turnkey properties in Detroit are typically 3 or 4 bedroom single family homes, priced on average between $45,000 and $65,000 providing unrivalled double-digit net income returns of up to 14 per cent after all fees and costs.”
5. UK (Hotel) – Properties of the World
Properties of the World expects commercial property to continue climbing in popularity in 2017.
Interest in commercial property has risen 20pc since Brexit
Fixed rate returns provide peace of mind and mitigate risk, say Properties of the World, which is drawing many investors to commmercial property, such as hotels.
“Hotels continue to perform very well for us – commercial properties that provide fixed returns. In simple terms, fixed returns mean certainty, and that is precisely what an increasing number of investors are looking for right now. We’ve received a 20 per cent uptick in enquiries for commercial property investments since the UK’s Brexit vote. I suppose buyers like the fact that hotels, student accommodation and care homes offer fixed returns over five or more years. The fact that the return is considerably higher than residential buy-to-lets further adds to the appeal. This is a proven market experiencing increasingly strong demand.
“Investors in the Wyncliffe House Hotel in coastal Pembrokshire, Wales, for example, can look forward to fixed rate rental income of 10 per cent per annum for 10 years. With a purchase price from £45,000, this hotel offers an ROI of 125 per cent. With bank savings generating returns of up to 1 per cent, it’s easy to see why many people are choosing to use their savings to buy commercial property, which offers far greater, fixed rate returns.”
Investors will continue to bank on bricks and mortar in 2017
Real estate will remain a secure, stable form of investment in the coming year:
“There continues to be a strong case for the security of bricks and mortar. Property will continue to provide steady returns as well as capital growth. The fact is the value of your property cannot be wiped out overnight unlike other asset classes. Property also does not experience the volatility of the bond and equities market.
“However, we have noticed that more and more buyers are looking at hotels, student and care homes as they provide a fixed return that gives the buyer certainty in the backdrop of the uncertainty of Brexit. Nonetheless, we expect we expect investor demand to moderately rise. Where else are they going to put their money? Certainly, not all of their funds in bank accounts, where, in real terms, their funds are depreciating in real terms due to the interest rate being lower than the RPI (inflation).”
Too early to predict Brexit’s impact
“Brexit may have some impact, but it is too early to say. We expect more buyers to move away from traditional buy-to-lets and purchase properties that offer fixed returns, particularly hotels. The fact is that our clients tell us that they really appreciate the service we give them. A theme we hear again and again is that “we really care”, “we listen to them” and we are considerate in the properties that we recommend they purchase. So it’s no surprise that we are getting more and more repeat buyers, which we believe will mitigate the Brexit effect.”
Coming soon to the market…
“We are launching a development in Luton. Watch this space!”Google+