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The Brief.Property Investment News that matters

EDITION FIVE

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Last weekend IPIN took to the road again and exhibited at the OPP Live Property Investor Show at London ExCel. We found the show to be time extremely well spent in many ways. Not only did it provide another great opportunity to meet many of our existing Members face to face, but it was also encouraging

to see the influx of interest in our Secure Exit Strategy™, particularly when compared to many of the opportunities on display elsewhere at the show. Thank you to everyone that took the time to come and see us, we look forward to taking part in more shows in the future.

Contents02 CONTENTs

IPIN EXHIBIT AT OPP LIVE

03 INTErNaTIONal TrEasurE Wealthy overseas nationals are still buying properties in prime London

05 sEal Of apprOval? Ed Balls calls for stamp duty holiday and 100,000 new UK homes

06 THE lONG aND sHOrT Of IT UK housing shortage expected to push up property prices

07 TakE THE INITIaTIvE UK home sales set to rise – RICS

08 plaNNING aHEaD Student landlords urged to complete UK property purchases by November

09 GOD BlEss aMErICa USA property prices increase further

10 yOu say yOu waNT a rEvOluTION? Hostel chic is fast becoming a serious threat to its higher priced low cost competitors

The Brief.

From left: Michelle Daly, Mark Wilson and Claire Goddard

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Wealthy overseas nationals are still buying properties in prime London

International treasure Well over half of overseas high-net-worth individuals (HNWI) still view London

real estate as the number one destination for buying investment property globally, according to a new survey.

The findings of the Cluttons International Private Capital Survey 2012 revealed that 57 per cent of overseas HNWI still view London as the world’s leading destination to invest in property in spite of the UK recession and wider Eurozone crisis.

Global appetite for buying investment properties in the English capital – residential and commercial property assets – has actually increased over the past year, with overseas investors – both institutional and individual – contributing close to 90 per cent in recent commercial asset transactions.

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Although residential property prices and rental values in prime London are currently are at a record high, the growing supply-demand imbalance in the city is likely to push prices even higher; an attractive proposition for investors, particularly HNWI with cash to spend.

The majority of the HNWI surveyed cited strong capital growth as the primary appeal to investing in London; the rapid recovery of central London residential from the impact of the global credit crunch is a key factor influencing buying investment property decisions.

“Quite remarkably, 43 per cent of these highly mobile high-net-worth investors state that the global financial crisis has had no impact on their view of London as a top investment target location. In fact, almost a third [29 per cent] go on to claim that London is better-placed because of the Eurozone difficulties,” said Bill Siegle, Senior Partner, Cluttons.

He added: “The fundamentals of the London economy remain strong; the city attracts dynamic businesses and skilled professionals from around the globe. This gravity effect underpins the city’s appeal to wealthy individuals looking for investment opportunities in the next 12 months.”

The global financial crisis has had no impact on their view of London as a top investment target location.

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Shadow chancellor Ed Balls, during a recent Labour conference speech, called on the government to introduce a two-year stamp duty holiday for all first-time buyers purchasing properties up to £250,000 and to finance the construction of 100,000 new affordable homes to help stimulate the residential property market and in turn speed-up the economic recovery.

The Labour MP said that the coalition government should use the £3-4 billion expected to be raised from the forthcoming auction of the 4G mobile phone spectrum to fund the temporary tax break and house building programme.

He calculates that the lower estimate of £3 billion from the 4G windfall would be sufficient to fund the construction of 100,000 affordable homes - a mix of shared ownership, affordable rent and social rent - at a cost of about £2.5 billion and the two-year stamp duty holiday at a cost of approximately £500 million.

Mr Balls told delegates that the sharp fall in house building levels had resulted in a 68 per cent decline in the volume of affordable homes being developed and the loss of well over 100,000 jobs, but insisted that a hike in development activity would result in a major boost for the economy.

He said: “With this one-off windfall from the sale of the 4G spectrum, let’s cut through this government’s dither and rhetoric and actually do something. Not more talk, but action right now.

“Let’s use that money from the 4G sale and build over the next two years 100,000 new homes - affordable homes to rent and to buy - creating hundreds of thousands of jobs and getting our construction industry moving again.

“Add to that a stamp duty holiday for first-time buyers buying homes up to £250,000 and we can deliver real help for people aspiring to get on the property ladder.”

The Brief.

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Seal of approval? Ed Balls calls for stamp duty holiday and 100,000 new UK homes

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UK housing shortage expected to push up property prices

The long and short of it… The anticipated surge in demand for housing in the capital over the next decade is not expected to be met by an increase in supply which is likely to result in even higher property prices and rental values, according to independent research published by Cluttons.

It is estimated that around 240,000 new homes need to be delivered nationwide each year and yet less than half that level is actually being met, with many developers struggling to raise the finance required to invest in fresh housing.

The most acute supply-demand imbalance is in London with no sign of the supply side increasing which explains why the city is expected to see the greatest capital appreciation moving forward.

The report also shows that London has the highest concentration of renters in the UK. In fact, private renting in the capital has doubled in the last 20 years. A sharp rise

in home prices, lending constraints, lifestyle changes and migration have all been contributory factors.

Despite the fact that new jobs created in the capital over the next decade will be disproportionately skewed to the highly skilled and higher earning, a growing proportion of households will find themselves unable to access homeownership due to the lack of homes in relation to demand. Consequently, even more people are expected to live in rental accommodation which should force rental values to rise further; an attractive proposition for buy-to-let investors.

“A growing and vibrant London offers a wide range of residential opportunities for both investors and developers. Small private landlords will continue to play an important role in the capital, including creating more units from the existing stock,” said Julian Briant, Head of Residential Consultancy, Cluttons.

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Take the initiativeThe residential property market is expected to see a stronger end to the year due in part to to the prospect of greater mortgage availability on the back of the government’s Funding for Lending initiative, the latest Royal Institution of Chartered Surveyors (RICS) housing market survey shows.

RICS report that expectations among surveyors for future home sales reached their highest level in September since May 2010 due to the introduction of the Funding for Lending scheme which aims to make cheap funds worth about £80 billion available to lenders. In return, they must lend the money on to commercial and personal borrowers.

During September, a net balance of 26 per cent more respondents projected that transactions would rise during the final quarter of 2012.

However, despite the projected increase in property sales, RICS suggested that prices are expected to remain rather flat over the same period.

Surveyors, when asked about prospects for property prices in the fourth quarter, expressed greater optimism, with nine per cent more respondents expecting prices to fall in Q4. Although still in negative territory, this is the most positive reading since the time of the expiry of March’s stamp duty holiday, RICS said.

Peter Bolton King, RICS Global Residential Director, commented: “The housing market was relatively flat during September but surveyors are optimistic that the run in to Christmas could see an increase in activity in many areas of the country. Prices are still dipping but at a much lower rate than seen in previous months.

“Despite this, problems still exist and more needs to be done to get the market moving. Unrealistic expectations on the part of vendors seem to be stalling the transaction process.

“Meanwhile, although the Funding for Lending scheme appears to be improving mortgage availability, those at the very bottom of the housing ladder are still struggling.”

UK home sales set to rise – RICS

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Student landlords urged to complete UK property purchases by NovemberPeople looking to invest in the student property sector ahead of the next student rental rush in January 2013 are being advised by Move With Us to purchase before 1 November 2012 in order to complete their purchase in time for the busy student housing season.

Research by Move with Us found that just over half - 51 per cent - of new students look for property during January and February for the upcoming academic year.

The survey also revealed that over half of second and third year students also start looking for property to rent in January and February for the following academic year, not leaving it until September as some had previously assumed.

“Although January may seem a little premature for students to be looking for properties to rent for the next academic year, the competition for high quality accommodation nowadays is fierce and it’s very much first come, first served,” said Robin King, Director at Move With Us.

He added: “Second and third year students typically begin to look for property at the start of the second term after the Christmas break, therefore it is a huge misconception that September is the date that landlords should work towards. Making sure that you complete on your property by January will give you a much higher chance of securing good, reliable tenants.”

King reports that a growing number of students now demand more for their money when it comes to renting property.

He continued: “The myth that students will live anywhere is long out-of-date and these days they are demanding much higher standards of accommodation. When looking for a property to rent out, investors need to bear this in mind and amongst other things should ensure that the bathrooms and kitchens are modern and bright, the internet connection is fast and reliable and that the property is in a good location.”

Planning ahead The Brief.

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People looking to invest in the student property sector ahead of the next student rental rush in January 2013 are being advised by Move With Us to purchase before 1 November 2012 in order to complete their purchase in time for the busy student housing season.

Research by Move with Us found that just over half - 51 per cent - of new students look for property during January and February for the upcoming academic year.

The survey also revealed that over half of second and third year students also start looking for property to rent in January and February for the following academic year, not leaving it until September as some had previously assumed.

“Although January may seem a little premature for students to be looking for properties to rent for the next academic year, the competition for high quality accommodation nowadays is fierce and it’s very much first come, first served,” said Robin King, Director at Move With Us.

He added: “Second and third year students typically begin to look for property at the start of the second term after the Christmas break, therefore it is a huge misconception that September is the date that landlords should work towards. Making sure that you complete on your property by January will give you a much higher chance of securing good, reliable tenants.”

King reports that a growing number of students now demand more for their money when it comes to renting property.

He continued: “The myth that students will live anywhere is long out-of-date and these days they are demanding much higher standards of

The recovery in the US housing market continues to strengthen, with property sales and prices rising across many parts of the country, fresh figures show.

According to the National Association of Realtors, sales of previously occupied homes, or resales, increased by 7.8 per cent in August compared to the previous month, marking the highest pace of growth since May 2010, and were up 9.3 per cent year-on-year.

The month-on-month hike in property values to an average of $187,400 (£117,000) represents the fastest pace of growth in over six years, suggesting that the market has already embarked on the long road to recovery.

“The US housing recovery is for real,” said Sal Guatieri, Senior Economist at BMO Capital Markets.

The recent rise in demand for homes in the US has been driven by increased affordability levels, record-low mortgage borrowing rates and greater activity among national and international investors seeking to take advantage of high rental yields in some parts of the country.

Guatieri added: “Great affordability, pent-up demand and strong investor interest in rental units are driving the

market, and QE3 can only help by reducing mortgage rates further.”

A separate report from the Commerce Department reveals that housing starts increased by 2.3% from July, and were up 29.1% from the August 2011 rate, acting as a further indication that US property market conditions are improving.

USA property prices increase further

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Hostel chic is fast becoming a serious threat to its higher priced low cost competitors

You say you want a

revolution?

The humble hostel has previously been associated with backpackers and traveling groups of students, but these days the picture is very different, offering modern high end accommodation appealing to more cost-conscious travellers than ever before. This specific asset class is growing significantly, showing particular resilience through the current economic recession. Particularly in urban centres like Liverpool, the location of our current SES investment, with demand for affordable accommodation outstripping supply. The budget hotel sector is the fastest growing part of the travel industry, growing by 35% during the recession (three times faster than the overall hotel market). In the next two decades we can expect to see a UK budget hotel being built, opened or converted every five days.*

Historically, little data has been compiled about the hostel sector, but as more figures become available, it is becoming increasingly clear that it poses a serious threat to its higher priced competitors. Not only are

hostels more cost-effective, their convenient facilities and services are also putting them in increasingly high demand for city-trippers, business travellers, groups and financially prudent families. Amenities such as self-catering kitchens, the availability of larger rooms for families to share, games and movie rooms to keep guests of any age entertained on site make these hostels a particularly high demand choice.

IPIN’s current Secure Exit StrategyTM application – EVOLUTION LIVERPOOL – is progressing rapidly with over 50% of all units now allocated. The key features of this investment are:

• 18% annualised returns • Maximum 3 year term • Invested deposit protected

*Melvin-Gold Consulting 2011

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CLICK HERE FOR MORE!EVOLUTION LIVERPOOL

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