Delights of Dubai beckon
Overseas investment is increasingly attractive, particularly for second homes and holiday lettings.
Until relatively recently, few of us invested in residential bricks and mortar apart from buying a main home.
In the 1960s and 70s, cheaper air travel brought the delights of France and Spain to many tens of thousands of Britons, triggering a holiday home spending spree which continues to this day. Then 10 years ago the advent of Buy to Let mortgages transformed the UK property market by creating thousands of new landlords.
With a much more savvy property-owning population, the investment wheel has moved on. While investment in British property for rental or holiday letting is still popular, most accept there will be a lower rate of return on their money as a result of increased house prices. Gross rental yields on new-build apartments in Norwich, for instance, can be less than 5pc on a central city property.
Overseas investment is increasingly attractive, particularly for second homes and holiday lettings. The perennial favourites of France, Spain and the USA, particularly Florida, continue to attract a great deal of English money, although recently some of these investors have switched to Croatia and Bulgaria for the faster capital growth offered there.
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Now the adventurous are looking to Dubai, which not so long ago was a pearl fishing village on the edge of the Arabian desert. Its 25 miles of shoreline are undergoing an amazing transformation, with an estimated £50bn of building work planned or under way, and one-fifth of the world's cranes working around the clock.
Among highlights at this United Arab Emirates resort is a £250m underwater hotel, an indoor ski resort with real snow, the world's tallest building and the only seven-star hotel anywhere - with doorways adorned with gold leaf.
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The Mills Knight estate agency, a family-run business located at Bank Plain in Norwich, is keen to introduce Norfolk investors to the possibilities of buying property in Dubai, through a long-time contact from the city who now runs a residential property business there.
Julie Engall, partner in Mills Knight with her husband Neil, says: “We have known Phil Sheridan for more than 20 years and are happy to introduce clients to him. We have staged one Dubai weekend already, and discovered there was real interest locally, particularly from people who have been on holiday there and can imagine what the various developments will be like.
“People buying property abroad often want to deal with someone with personal experience of that marketplace, who know what they are talking about and can give professional advice on all aspects of purchase. More adventurous investors often buy off-plan at various developments, although the more cautious may like to see what they are purchasing once it has been completed.”
Mr Sheridan runs High Society Real Estate, incorporated under UAE law and regulated by the Dubai government. It is the exclusive Dubai-based agent to the Guild of Professional Estate Agents, based in London's Mayfair, and backed by a network of more than 700 independent agents across the UK.
Julie Engall adds that returns on investment in Dubai can be considerably better than those achievable in the UK, in terms of capital growth and rental yield.
“Some developers guarantee returns of around 8pc, but Phil Sheridan believes some investors might prefer to by-pass these and benefit from the real market returns which he anticipates will be considerably higher.
“He has considerable experience of the Dubai market, and as well as offering properties for sale, starting at around £50,000 for a
555 sq ft studio and £69,375 for a one-bedroom apartment of 785 to 1163 sq ft at Eden Gardens in the heart of Dubai Sports City, he can also arrange finance for property purchase. Some of the larger British banks will also fund Dubai property purchase.”
The 50m sq ft Dubai Sports City is a key feature of the 40 projects being developed at the Dubailand complex, a three billion sq ft area twice the size of Walt Disney World Resort. First phase should be completed by 2008, and the main themes will include an Arabian Theme Park, Aviation World, Dinosaur World, Motor Racing World, the biggest shopping mall in the world and a sports complex including the first Manchester United Soccer Academy outside the UK.
On the Norwich investment front, Mills Knight is still encountering a lot of investors keen to put their cash into bricks and mortar in the city.
Julie Engall adds: “Investors and first-time buyers are fighting over the same type of property, flats, terraces anything at the lower end of the market, which is pushing prices up. There is just not enough property of this type around at the moment.”
She says furnished lettings are popular currently. “People are coming here to work on six-month or yearly contracts and don't want to be buying furniture or white goods because they will be moving on after the job has finished. There is a lack of furnished rental homes at the moment, and demand is very good up to about £600 per calendar month.”
Mills Knight will be providing Home Information Packs to clients on a “no sale, no fee basis” when they are introduced next year.
“People can put their property on the market with us without any initial up-front costs. We hope to be able to provide a pack through the TEAM network within five working days for the average property and within 14 where the property is unregistered or leasehold. It seems the government is determined that the packs will be introduced next year and we believe we are ready for them.”
However, Julie Engall believes homesellers are going to need a lot more advice after their introduction, which she thinks will help boost business for the more experienced and professional agents.