3 UK cities for expats in UAE looking for strong property returns

Contributed by Select Property, 01 June, 2015

As more Brits based in the UAE are turning to their homeland for a high yielding property investment, where are the best locations to invest currently?

When it comes to buy-to-let property investment, it would seem that there's really no place like home.

Earlier this month, offshore bank Skipton International told Gulf News that there's been a notable increase in the number of expats living in the UAE investing in international property, with a particular focus on the UK market.

It's not hard to see the appeal. Rising rents in Britain have contributed to a 4.7% boost in investor yields in the last 12 months. Add to that attractive mortgage deals that are currently available, the positive long-term outlook and the perceived security of investing in their home country, and you've got an investment location for these investors that's assured and can deliver them strong, regular yields.

Traditionally London is the go-to hotspot for overseas property investors that head to the UK. Yet although property values in London can offer fantastic capital gains, what happens when the bubble bursts? There are already signs of a slowdown in values, with Knight Frank data from April recording annual price growth at its slowest rate since 2009, meaning that investors will need to rely on monthly yields to maximise their return on investment.

And it's in the UK regions where price and rental growth is being felt the most.

Below we've picked out three of the cities in the UK that are currently extremely popular amongst buy to let investors and why you should be considering them, too.

  1. Manchester

    Earlier this year HSBC labelled Manchester as the 'UK's second city for investment'. It's the largest functional economic area outside of London, and continued economic investment has been one of the key drivers of the local private rented sector (PRS).

    A report published last year by Knight Frank found that rental returns in Manchester grew by 5.27% year-on-year, 13 times faster than London, as the city's housing stock, amongst the lowest in the UK, struggles to keep up continued demand from tenants. This will only continue in the coming years, as Manchester is set to benefit from £7 billion worth of investment from the UK government as part of 'northern powerhouse' plans, bringing more business and workers to the north-west.

    Furthermore, Manchester is also an attractive proposition for student property investors, with a student population of 100,000, whilst it also has one of the highest graduate retention rates in the country.

  2. Southampton

    In December 2014 The Daily Telegraph named Southampton as the UK's number one buy-to-let hotspot, with investors achieving yields as high as 8.73%.

    As we headed into the New Year, the performance of the city and the wider region showed few signs of decelerating. In April 2015, rental rates in the south-east grew 2.6% month-on-month, and were 7.4% higher than they were in April 2014.

    Additionally, the south coast city has two universities and a student population of 40,000 – yet only 10,000 of those have access to PBSA.

  3. Glasgow

    Property prices in Scotland's largest city grew by 14.6% year-on-year in March, a rate that far surpasses that of London. Glasgow's market attracted the most inquiries and has the most positive outlook in the whole of the UK, yet with an average property price of £145,543 is still a significantly more affordable city than others around Britain.

    In terms of monthly yields, rents in Glasgow grew by 11.1% between 2010 and 2014. Rates in the wider Glasgow and Clyde region increased by 1.3% in the year to January 2015, with the average yield for buy-to-let investors 7.2% in the last 12 months.

    It's arguably one of the most exciting cities for student property investors, too. Glasgow has six universities and 80,000 students, yet only 10% of students have access to PBSA, with this type of preferred property also coming with a 30% rental premium.

Tags: business | investment | Scotland | offshore | tax |



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