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Why UK Property Investment?

Investing in a transparent market with a strong demand from tenants, where there is massive potential for capital growth, where access and infrastructure are improving and there are no obvious downsides (as the single biggest risk factor – the collapse in the economy has already happened and is off the cards) is an appealing opportunity for any investor.

The UK property market is at its lowest point for many years and with the economy in a recession and banks tightening their lending criteria, we are in a perfect position to invest in property now.

Current pull factors for foreign countries to invest in the UK property market are:

  • Robust & deregulated economy
  • Stable political environment
  • Advantageous tax regime
  • Ultra low interest rates
  • Attractive lifestyle choice
  • Safe haven investment opportunity for non-domiciled residents
  • Property prices at lowest level since 2001
  • Positive cash flow
  • 2012 Olympics

Push factors in the country of origin like South Africa include:

  • Economic growth that generates wealth
  • Regulatory environment, notably exchange & capital control
  • Geo political conditions

Exchange control and international investment

We can see clear trends in change of capital control; Russia, China & India currently average between 5%-10% GDP growth and Russia only removed all exchange controls last year. India lifted capital exchange for foreign nationals, but controls remain in place for residents. China recently announced relaxation on foreign exchange controls. In central London, overseas buyers currently account for around 1/3 of all transactions.

The rapid growth of these countries over the next decade will see the process of wealth creation and further relaxation of capital control, marking the steps and increasing the ability of purchasers from these countries to gain a foothold in the European market.

 

Pros & Cons for direct and indirect investment in property

 

  • Direct investment is less volatile than equities and can serve to balance a given portfolio by offering exposure to an alternative asset class to bonds and shares, however this may require high levels of capital. The average buy-to-let property costs £150K to £250k with a 20%-30% deposit required, this is in addition to stamp duty and legal fees.
  • The high rental yield on the other hand, provides above average return on cash invested, and with expected capital growth the return on cash investment will be substantial.
  • The purchase of one property (without assistance and guaranteed income) also means the investor has a very high concentration of risk associated with their investment. LONDON PROPERTY TRADER’s investment package eliminates this risk factor. A combination of services from Egoli UK and an ongoing supply of tenants make the guaranteed returns possible.
  • The performance will be influenced by local and property specific factors rather than solely market based trends. LONDON PROPERTY TRADER together with Egoli UK, has created a niche market that is not affected by the current economic situation.
  • Direct property investments are also relatively illiquid; it is a sector where sales are measured in months and not minutes. LONDON PROPERTY TRADER focus on properties below market value and with development or improvement potential to ensure that equity can be generated without relying solely on market trends.
  • The purchase also assumes a willingness to undertake ongoing active management of the investment, and in this case in a foreign country. LONDON PROPERTY TRADER offers a long term agreement that would guarantee rental, no void periods and no maintenance costs.
  • Investing in a down turn market should be done with caution and investors need to look at a company’s business future as well as the investment opportunity. LONDON PROPERTY TRADER / Egoli group is settled into a solid niche market that focuses on a base market that is essential to trade and industry, regardless of economic conditions, ensuring a secure future for investors and underwriting the guarantees we offer.
  • Indirect investment in the residential sector is through the purchase of shares in property companies. The problem with this is that you are tracking the performance of individual companies where you have little or no control in the management.

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