Simon morris - Where To Invest

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Information about Simon morris - Where To Invest
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Published on October 16, 2014

Author: SimonMorris5

Source: slideshare.net

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Simon Morris has launched a second guide in property investment, titled ‘London – Where to Invest’, which offers help with private, retail and commercial investing. There has never been a bigger opportunity for property investment in London, with prices rising across all markets. London has also become the most expensive city with average house prices now over £500,000.

1. London, Where to invest A guide to property investments in London

2. Content 3. Introductions to the Current Market 5. Long Term vs Short Term 6. Residential Market 8. Commercial Market 9. Central London – Commercial Property 11. Central London – Retail Property 12. Central London – Hotel Property 13. Different ways to invest in the property market 14. About Simon Morris

3. Introduction to the Current Market In London it’s becoming particularly harder to purchase individual property assets without significant investment. With residential and commercial properties increasing in value, the capital is attracting foreign investors who have available capital and a need for their capital to be invested safely. For the UK Investor, using regulated financial products does offer individual investors alternative routes to grow their capital without the need for hefty mortgages or deposits. The high market entry prices have become so high that there are regulated financial products that offer investment into London property – but with the risk spread across various types of property and areas. The following Guide is intended to give an overview of the types of property and areas within London that are performing well in terms of increasing in value and long term appeal.

4. The media has been speculating over the future of the prime central London property market, yet, some of the worlds most established and reputable international property developers, with the best research departments on the planet, continue to build in a few select areas. Some London estate agents have even been quoted as saying new property listings are pricing in the coming impact of the new 2015 UK capital gains tax, and expect price growth to slow in 2015. However, latest statistics show a distinctly different story. According to Halifax UK house prices actually rose at their fastest pace in 8 years in the 3 months to July 2014. From June to July 2014 UK house prices outperformed Bloomberg survey forecast by 3 times anticipated growth. While Halifax reports national prices up 10.2% over the previous year, Zoopla’s index shows London prices up 11.72%. Analysts comment that both confidence and demand are growing. Improving economic fundamentals, and an end of year selling spree ahead of the capital gains tax deadlines could drive up gains even further. In an August 2014 Bloomberg television report a leading fund manager predicted a UK interest rate increase in early 2015, following on from a US fed rate hike. This would provide even more motivation for London property buyers to act quickly, ahead of the new trend curve. Investing in London

5. Long Term vs Short Term More experienced investors know that location and quality will always be in demand and International property developers also realise that London has limited space for development and an increasing need for housing units – which ultimately keeps the market strong. Some new property developments are testing record setting highs of £10,000 per square foot. History shows that fluctuation in prices over a five to ten year period will ultimately result in values rebounding to higher than their previous levels, during which rents will rise significantly, adding superior yields. Property investors that can and intend to hold their income producing real estate investments long term, will, no doubt, come out ahead.

6. The majority of London Boroughs have continued to perform well according to latest Land Registry figures – see below for a select few that are expected to continue to perform well throughout 2014 & 2015. The newest figures have reported annual price rises ranging from the bottom of the scale at 6.1% in the borough of Redbridge, to the top of the scale at 26.2% in the borough of Waltham Forest, both of which are situated in north-east London. For residential investors it is recommended that research is done to historical house prices along with the following:- • Ensure that there are good transport links into the City and the West End. With so much investment into the Central London in terms of commercial property, some of the best residential opportunities are coming from areas that are in reasonable commuting distance. • Look for areas that are being invested into or extensions of tube lines (e.g. Northern Line extension). • If you are looking to invest in buy to let property look out and research areas that are close to universities and hospitals where rental opportunities are always in demand. • More affordable areas often neighbour areas that have shown a previous rise in property prices. Residential Market

7. See below for two examples of areas that show good signs of longer term investment possibilities:- Peckham SE15, London Borough of Southwark • Peckham attracts a good mix of young professionals, couples and families. • There is an excellent range of schools and open spaces, including Peckham Rye Park and Common. • It has good transport links to London Bridge, Canada Water, London Victoria and Clapham Junction. • The area is deemed relatively affordable in comparison to neighbouring areas like Dulwich Village. • In most cases, fully modernised, one-bedroom flats are achieving above asking price, ideal for investors. Brixton SW2, London Borough of Lambeth • There are travel links via Brixton tube station, on the Victorian Line, and Brixton overground station. • The recent development of Brixton Square by Barratt Homes has attracted interest from a variety of investors. • Brixton’s trendy food market has influenced the areas desirability, appealing to a younger, cooler demographic. • Young professionals, with help from the bank of ‘Mum and Dad’, have become the primary buyers in the area. • Two-bedroom garden flats, with prices starting at £550,000, are particularly popular amongst these buyers.

8. How to Invest in Commercial Property Whilst the average British person may not have deep enough pockets to cover the £1.1 billion asking price of the Gherkin, there are a number of financial products available that invest into commercial property. Please refer to our Property Investment Guide for details of [Property-based investment products] Investors are attracted to Commercial Property as historically it’s been proved that a tangible asset can often protect investors from currency fluctuations, and the unpredictable nature of the stock and commodities markets. Commercial property includes retail units, shops, shopping centres, warehouses and industrial units and office space. Commercial property can also include assets related to the leisure industry such as hotels. When looking into commercial property investors should consider the different sectors available, broadly, most investors look into the office, retail and leisure markets. Its good advice to specialise and focus your effort on one of these sectors. An attractive office development which will offer excellent yield has different qualities to a good investment in the retail or leisure industry, the different uses of each type of property, and associated factors, make picking one area of specialism early on a good route to take. Also be aware that generally the market for all property in London generally splits into two areas; Prime Property which as the name suggest usually attracts top class tenants in all assets classes. There’s also Secondary and tertiary property which is situated in less prime locations, with high-quality tenants harder to find. There’s a higher yield available from these sub-prime properties, as the risk of empty or void periods and defaults is higher. Although all discerning investors know to conduct their own research thoroughly before making investments we can give brief general advice on what to look at in the different sectors in the current (2014) market; Commercial Market

9. Central London – Commercial Property Real-estate investors from Asia and the Middle East are lining up to bid for two of the most recognizable office buildings in London’s skyline, adding further interest to the U.K. capital’s property boom. Within the Central London, the city’s financial district, 30 St. Mary Axe, widely known as the Gherkin is being directly marketed to dozens of investors for about £650 million, or about $1.1 billion, after going into receivership in April. Further down the Thames in Canary Wharf, the financial district that sprang up from London’s former shipping docks, HSBC’s HSBA.LN +0.03% global headquarters could become the most expensive single building ever sold in the U.K., if it goes for the marketed £1.1 billion. There are a few factors that have investors making long term commitments to the Central London • The UK’s robust recovery to the global financial crisis. • Recent statistics from Morgan show that the number of jobs available in the City is moving higher, up 10% in June from a year earlier. • From a fundamental perspective, the U.K. looks strong compared with elsewhere in Europe. The latest official statistics showed unemployment falling to 6.4%. The Bank of England has increased economic-growth forecasts to 3.5% for this year.

10. Whilst the previous owners of the Gherkin had defaulted of the 300 groups that have registered interest in buying the Gherkin, the bulk are from Asia. “That’s where there’s the highest demand,” Mr. Stocks at Deloitte says. “They’re looking to invest in safe assets in London.” Only a portion of the 300 are expected to engage in the bidding process, which will start in mid-to-late September, he said. • Investors poured £4 billion into central London offices during the second quarter, according to CBRE. Overseas buyers accounted for 69% of that, it said. • Asian investors accounted for 33% of second-quarter central London investment. • China Life Insurance bought a 70% stake at 10 Upper Bank Street for £541 million, and the China Construction Bank Group purchased 111 Old Broad Street for £111 million, CBRE said. • This marks a shift in the London property market. Overseas investors “are buying these assets in a very different way than how the market operated in the past,” said Matthew Richardson, director of European real-estate research at Fidelity Worldwide Investment. - He said that there can be downsides to the influx of foreign capital, saying that transparency, often touted as a key attraction to the U.K. property market, is fading as overseas investors decide not to contribute information to industry bodies such as Investment Property Databank Ltd. “Our ability to understand the market is decreasing,” he said.

11. Central London – Retail Property Over the last 12 months, increasing interest in London retail destinations has come from brands based outside of the UK. American retailers in particular are keeping demand for London based retail assets at a new high. It’s not just clothing brands either, many American restaurant chains including Five Guys, the 1,000 location-strong fast food chain, who opened its first London location in Long Acre at the end of 2013 and is now rapidly expanding across Greater London and the South East. The UK retail market place is highly competitive and for every Apple there is a Best Buy or Borders that fell by the wayside. Central London, is extremely competitive area and prime Zone A rents and business rates can reach staggering levels compared to equivalent space in American cities. Don’t expect this to put off American companies trying to crack the European market with a flagship store in London, but do expect that not all of these ventures will prove fruitful. This demand from overseas for prime central London retail space is high now, but the availability of flagship store locations is at an all-time low. We’d expect these brands to always hold out for the prime locations and don’t expect to see them opt for less fashionable parts of the capital. We believe that investors in Zone A will see continued full occupancy, and competitive rents for the foreseeable future.

12. Central London – Hotel Property London is the best-performing hotel market in Europe. This is the flip side to the picture in the regions where London occupancy levels would be met with disbelief. Brand hotels are popular with investors and travellers in the London area, both investors and guests know what to expect from a brand. The trend for brands started during the recession and has continued as we grow into sustained recovery. The impact of this on independent hotels has been felt, and some have struggled as bigger brands bought up struggling competitors and extended their reach across the city. Brand penetration of the hotel market has long since been a staple in the USA, many commentators wise to this market believe that London will in future follow the American model. Overall leisure spending has increased in the last two years, but a weakened Europe always remains a threat. There is still a strong demand for high quality and premium hotel and leisure space, and those looking at the prime end of the market should be able to find good returns.

13. Different ways to invest in the property market Bonds Bricks and mortar are only one of the options for investors. Fixed income property bonds are now available and offer healthy returns in the region of 6-10%. These are proving an increasingly popular option for discerning investors looking for low risk and high yield. Bonds offer a traditional safe investment, and typically they provide a secure income and healthy capital return. In the current market bonds are increasingly become the investment of choice for those looking to take advantage of property price gains without having to physically own and maintain property. Investment funds Property investment funds are also gaining in popularity. Before investing in a fund astute investors should note the type of property that the fund is investing in (i.e. commercial, office, retail). Locations of the property held in the portfolio should also be placed under scrutiny. Other things to consider include; management charges - make sure these are comparable to other funds. You also need to consider how long your investment will be tied up for.

14. About Simon Morris Simon Morris is an independent property consultant with over 15 years’ experience in property investment. Simon actively works with a number of funds and high net worth individuals, advising on property purchases, to ensure investments made into property, are measured in terms of risk, and bring solid return on the initial investment.

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