Will Expats Sell Up And Come Home After Brexit?

UK flag EU flag Brexit

Brexit has been a topic of discussion for some time now, and recent talk has worried expats. The question on many lips is, what are British expats planning on doing? Will they sell up their European homes and move back to England?

According to United Nations there are just over 4.5 million British citizens currently living outside of Britain; 1.3 million of these Brits abroad reside in European countries. This is a vast number of people, and the decisions they are likely to make following Brexit will affect not only them, but the entire country and beyond.

What might happen after Brexit?

The Citizen’s Rights Agreement was agreed between the UK and EU27 in December 2017 and ensures that Brits and EU Nationals reserve their residency rights. Following on, in March 2018 it was agreed that the effects of Brexit would be postponed until the end of 2021 (unless a deal is not agreed). If British expats living abroad wish to ensure their right to stay in the country that they are currently resident in, it is strongly advisable to make arrangements before March 2019 as the 2021 extended deadline is not guaranteed. After Brexit, British citizens will no longer have freedom of movement within the EU and the application process for living, or working, abroad is likely to be far more complicated.

Why expats might return to the UK after Brexit

Expats may decide to return to the UK for a variety of reasons; many of which are financial.

Although no one knows exactly how Brexit is going to affect the UK, there has been talk that travel might be more difficult. It is also expected that people living in other countries may not get the medical advantages citizens living in the UK get currently.

If travel is going to become challenging, then coming home occasionally might be slightly more difficult. In some instances, some European regional air routes may not be economical. Therefore, this could be a reason for British expats to move back to England. Travelling won’t become impossible but whilst Brexit is on the horizon, people might feel more secure to be in England whilst changes are being made.

Will Expats Sell Up And Come Home After Brexit? Aspen Woolf

Especially in Spain and Portugal, expats are contemplating selling their properties and moving back. Why is this? Well, their family is all at home and the fear of not being able to see them easily might cause a fright. There is the dilemma for having friends in another country, but their family waiting for them at home. There are also long-term benefits for moving back home, as Brexit may result in the country benefiting financially. There is talk that the UK property market may have a sudden growth and improve the UK economy.

Another worry which might explain why expats are thinking of moving back to England is the recent suggestions about scrapping state pensions for those who live abroad; this might turn into a new law making it illegal for expats to receive a state pension. Whilst many people move abroad once they are retired, a state pension is a huge important factor to enable people to live. Therefore, this might just be a scare for expats, but the risk might just bring a lot of people back to England.

With all of the current uncertainty surrounding Brexit, many may find investing in property within the UK to be a more straightforward prospect than abroad.

Why British expats might choose not to return to England

On the other hand, there are British expats who are staying firmly in their new-found country and home. There are many reasons, whilst Brexit is going ahead, people are not giving in and deciding to stay away from England.

If British expats were to move back to England, the possibility of them returning to their home abroad might be slightly difficult. Whilst moving homes is stressful, moving to a new home in a new country is an entirely different prospect. There is current uncertainty as there has been a “withdrawal agreement for expats rights”. This means there are no guarantees that it will be a smooth transition from inside to outside the EU.

People who do not agree with the idea to leave the European union may also be more likely to stay in the country they have moved to. With fear that leaving the union may cause revolt between other countries who decided to stay it might be easier for people to stay put. However, it is likely there are other factors why people may stay abroad.

In general, people move abroad when they have retired to escape from their busy lives and relax. The weather is also a massive reason why, despite Brexit, people will choose to stay in the sunny relaxed climate elsewhere. There are pros and cons, and Brexit is a huge consideration which is making people think twice whether they want to remain abroad or move back home.

Will Expats Sell Up And Come Home After Brexit? Aspen Woolf

Currency movements

There is another issue which contributes whether expats will sell up and come home after Brexit, that is the currency movements. At the moment it stands as €1.138 to the pound, this is fall of just over 20% just prior to the subject of Brexit, therefore it has gone down, thus affecting any sterling payments received by expats. This is another huge consideration when predicting whether expats will sell up and move back to England. This is due to the fact that it might be worthwhile for expats to sell their properties and move back to the UK, depending on what will happen to the UK’s economy.

All in all, there are considerations for expats to ponder. Deciding whether to continue to live abroad in a different country or to move back home is currently on a lot of people’s minds. Will the property market in the UK decline or take a different turn? Will the currency keep fluctuating and will Brexit improve the UK’s economy? There are many factors that are going to be affected when the Brexit movement takes full force therefore the subject of expats will be greatly talked about. Whilst holiday homes are becoming more popular as well as renting out properties abroad as an investment, living abroad is another matter.

There are many different factors which may keep expats in their home abroad, however whilst having family back home the decision whether to stay or move is the main focus as Brexit is beginning to start. There is currently no guarantee what will happen plus here is uncertainty whether rights in the UK to EU expats will continue and also what rights the EU will give to those who remain . With the fear of pension laws changing, access to UK bank accounts and flights being affected by Brexit there are many factors that are going to change which may result in people moving back to the UK or staying in their home abroad.

There is still no definitive answer to the question of expats of leaving their new home abroad and selling up to move home: Will it be for the better or for the worse? No one knows what Brexit exactly will entail, and what changes are going to be made in terms of the property market in the UK and abroad. For expert advice regarding property investment in the UK or abroad, get in touch with Aspen Woolf, property investment specialists based in London, offering property investment opportunities across the globe.

What is behind Dubai’s strength as a real estate proposition?

Over 30,000 properties are expected to be added to the market in early 2018.

Dubai’s real estate growth is driven mostly by a combination of overseas investors living all over the world, and foreign nationals living in the UAE.

For 2017, the Dubai Land Department (DLD) recorded a total of 69,069 completed real estate transactions. The combined value of these transactions is more than Dh 285 million ($77.6 billion). This figure breaks down as Dh107 billion ($29.15 billion) invested by 39,480 investors making 52,958 transactions, and more than 65% of this is by foreign investors.

The total value of the land transactions in Dubai in 2017 is worth Dh285 billion. To put this figure into context, this is higher than the GDP of an astonishing 144 countries from the 211 recognised by the United Nations.

Figures show that around 23,000 non-GCC (Gulf Cooperation Council) and non-Arab investors completed 30,000 property transactions worth about Dh56 billion. Around 9,790 nationals completed or were involved in just over 14,380 transactions with a combined total of more than Dh37 billion. Almost 7,000 investors from Arab states but non-GCC completed 8,644 real estate transactions worth more than Dh14 billion.

Where are overseas investors from?

The largest number of foreign investors in 2017 came from India, making Dh15.6 billion worth of property transactions in Dubai. Next on the list was Saudi Arabian nationals who collectively invested more than Dh7 billion, then British and Pakistani investors whose investments came to Dh6 million and Dh5 million respectively.

Other nations investing increasingly in Dubai real estate are China, Egypt, Jordan and Canada.

Why is Dubai attracting this amount of investment?

These figures are extraordinary, particularly when it’s considered the total investment is higher than many countries’ GDP (gross domestic product), as mentioned earlier. The reasons behind this phenomenal overseas investment lie within the unique advantages Dubai offers as a global investment region.

The biggest reason for the investment specifically for the real estate sector is the very attractive RoI (Return on Investment) that can be earned by investors. This is a main consideration for any kind of investor before making a decision.

Rental income is an important consideration as part of the RoI as it matures straight away, when compared with capital appreciation that can only be achieved through the sale of the property or by releasing equity through a mortgage.

Average RoI in Dubai

The average amount of RoI earned on apartments in Dubai in 2017 was 7%. Villas achieved 5%, despite a general softening of sales prices and rent amounts. Research shows that for a two-bed apartment costing Dh1 million, an investor could net rental returns of Dh80,000. This is an 8% annual return on investment and would lead the investor to recover the entire investment within just 12.5 years even without inflation.

However, it’s worthwhile taking the post hand-over payment plans that are used by some people. This is where the buyer/investor pays 50% or Dh500,000 when the property is handed over, with the rest due within three to five years. As the rent from the very first day would remain the same, it would mean a RoI of 16% for the investor.

World-leading real estate sector

Dubai leads the real estate sector globally in terms of major cities offering investment hotspots. Returns average between 7 and 8% per year, which is high when compared with other high performing cities.

The sector is also helped with the solid regulatory environment. This reassures investors and ensures protection. During the last decade, the DLD has strengthened the regulatory and legal framework to make sure best practice is in force at every level of property management, from development to sale.

In addition to these positive points, Dubai has an accessible and liberal foreign exchange regime that promotes strong connectivity with investors from overseas. As it allows the free movement of profit and capital with little to no restriction, it’s obviously an attractive proposition for major investors.

This infrastructure is being refined all the time and is consistently improving. The progressive economy, consistent and continuous expansion of major infrastructure and world-class attractions has completely transformed Dubai into the five-star property investment destination it is today.

Aspen Woolf on the recent boost in offplan sales in Dubai

Foreign investment in Dubai property has seen record levels in 2017.

During the last week in May, a seven-day selling spree gave Dubai its best monthly offplan sales in 2018 so far.

According to data from GCP-Reidin, the overall offplan sales during May came to 1,830 units against the previous best number of 1,752 units racked up in January.

Combined value

Collectively, the May offplan deals were worth Dh2.28 billion. This beat April’s combined total of Dh2.05 billion and 1,461 units, despite the widespread assumption that this was the peak.

Usually sales would decrease during Ramadan and continue to do during the summer. However, it seems 2018 will buck this trend.

Seven City success

Much of the high number of sales is down to a developer called Seven Tides, who released 661 units at its high-rise project located in Jumeirah Lake Towers (JLT). This development is called ‘Seven City’ and all 661 units were bough over a span of seven days.

In total, the developer took bookings worth Dh300 million and is now gearing up to release another job lot of units at Seven Tides at some point in the future. The CEO of the developer said that… “if you offer investors a compelling proposition, based on ROI (return on investment), location and quality, they will invest irrespective of overall market sentiment and that is essentially, our three-pronged marketing strategy.”

A studio apartment at the development went for Dh354,000, while one-bed apartments went for Dh683,000.

Ready available properties

For properties that are ready and available in the secondary market, overall demand is steady. In May there were 1,028 of these sold, compared with 986 in April and 1,121 in March 2018.
There is a steady allocation of funds to this secondary market, which is something that offplan developers need to keep an eye on. It’s difficult to know how much unsold inventory is backed up from previous offplan launches, as not every developer makes this information available.

Most successful locations

The locations that did well in the May offplan sales are as follows. JLT drew a lot of offplan investor interest in May, but there were also increases for the Medan master-development MBR City. This ended up with total sales of 314 units.

Developers including Azizi and Sobha have launched focussed and sustained campaigns surrounding MBR City. Added to this, steady progress on the Meydan One Mall is also interesting investors.

After Meydan, Jumeirah Village Circle sold156 units, the Downtown sold 119 and Dubai Marina sold 118. In the ready property space sector, Dubai Marina did the best with 170 deals sewn up in May 2018.

Aspen Woolf On The Fluctuations In Dubai’s Property Market Since 2008

Dubai skyline at sunset - Aspen Woolf

It’s been ten years since the economic woes of 2008 that saw the biggest challenge yet for Dubai’s property market. Since then, the market has gone through various transformations as it continues to develop along with the city itself.

What kind of challenges did the imploding of the property bubble bring to Dubai’s market? In this blog, we look at the challenges that have been overcome as well as the biggest achievements of the industry over the last decade.

Sustainable Real Estate Market

While the immediate impact of the property bubble bursting in 2008/2009 were harsh, ten years on we’re looking at a more sustainable real estate market in Dubai. It boasts a more robust regulatory and legal framework and is generally much more mature.

One highlight of the last ten years is the development of the Real Estate Regulatory Agency (RERA), which started in 2007. Since then it’s come a long way in developing a standardised regulatory framework that protects investors and end users alike. It also helped to restore market confidence across the board.

Consumer Protection

The introduction of consumer protection measures has also helped the market to mature. The most notable of these is the introduction of mandatory escrow accounts for all developers involved in selling off-plan.

A significant amount of legislation has been implemented to further clarify the relationship between off-plan investors and developers should either party default. RERA also now has powers to cancel projects and there are guidelines in place concerning the process of liquidation.

A rental index came into force in 2013 and tenancy contracts were standardised in 2017. These are all positive steps forward in terms of tenant protection. Other legislation that legally distinguishes between residential and commercial property leashes is being discussed.

Regulating The Industry

Dubai’s real estate industry was very young prior to the crash, and this has meant regulating it from scratch. When you compare this to the UK’s property industry, which has had centuries to develop and refine legislation, you can see how challenging this is.

The city’s property market is evolving fast and the efforts of RERA and the Dubai Land Department (DLD) are really paying off.

Improving Market Transparency

‘Form A’ has been implanted to help with Dubai’s transparency problem. This is the standard contract mentioned above between broker and seller. The DLD is also planning to provide more up to date information to the market, which will help the drive towards transparency.

Restoring Investor Confidence

The main challenge after the crash of 2008 has been to restore investor confidence in Dubai’s property market. The city has introduced measures to make sure the market cannot overheat in the same way, and these have proven successful so far.

All the steps taken since 2008 have led to a solid foundation for the industry and should help to take the city to the next level over the next decade.

Market Maturity

Dubai’s real estate market in 2018 is much less speculative than it used to be. Investors are making measured decisions through the analysis of annual returns, and there is an increase of end-user demand. There are fewer speculative investors which has led to a more stable market, which means it’s a more attractive market.

The Youth Effect

Over recent years, younger people have settled in Dubai for the long term, meaning that more young people are prepared to invest in property. This is positive for the future of the market, and the city’s economy as a whole.

Future plans including the focus on tourism, developments and infrastructure in the lead up to Expo 2020, will continue to drive demand in the city for property. Despite the slight decrease in rental yields over the last few years, Dubai’s real estate market is widely thought to be one of the most reliable, attractive and sustainable markets in the world.

How Dubai Is Rebranding As A Family Friendly Property Market

UK investors should take notice of the vast potential for growth in Dubai.

Over the last decade, Dubai has become a destination people want to live and work in. In 2018, most property investors and buyers are looking to stay long term rather than flipping properties quickly. There are newly fashionable areas springing up all the time. For example, Business Bay has become home to many looking for downtown living space. Developments like Volante Tower, which is a residential tower in Business Bay, which has mostly sold to owner/occupiers. It’s not long been completed but only seven apartments are still available in the development, thanks in part to the amazing views across the Dubai Water Canal towards the world’s tallest tower, the famous Burj Khalifa.

Successful Residential Areas

How Dubai Is Rebranding As A Family Friendly Property Market Aspen Woolf

Image credit: Maher Najm via Flickr

Business Bay is just one of many enormously popular residential areas with infrastructure designed to make it accessible and enjoyable for residents. For example, there are miles of cycleways and pathways laid out, allowing people who live there to ditch their cars and enjoy the city streets in the cooler season between November and April.

New ideas such as a private member’s club within Volante Tower, including a pool, gym, spa and cinema, are boosting the popularity of living in the area. Its penthouse is priced at £6.5 million and represents decent value when compared to other countries. A report from Knight Frank in 2016 estimated that a similar place in prime central London would cost an average of £35 million, and almost double that in Monaco.

New Legislation To Protect Buyers

Other reasons for the growing popularity of residential areas in Dubai are the new legal frameworks that have been implemented to protect the buyer or investor. Since 2014, freehold titles have been available for foreign owners in specific free zones. These areas offer significant tax exemption and in Dubai include Business Bay, Palm Jumeirah, Dubai Marina, Burj Khalfa and Emirates Hills.

Where freeholds aren’t available, leasehold laws have been implemented, closely modelled on Australian laws for terms of 99 years. These changes in legislation are being developed to attract international investors.

British Families Choose Dubai

How Dubai Is Rebranding As A Family Friendly Property Market Aspen Woolf

Image credit: Serge Bystro via Flickr

Around 10,000 people move to Dubai from the UK every year, and there are increasing numbers of families settling in the region. This means more education facilities also. For example, half of the pupils at Dubai College hold British passports. The headmaster of this facility predicts that high class educational institutions will expand even further over the next few years He said: “We don’t yet have the numbers for Brexit but we see fewer people leaving for the States thanks to Trump.”

Wealthy expats from the UK generally prefer high-end detached villas in neighbourhoods such as Emirates Hills and Arabian Ranches. The latter now has an English-speaking school, and five-bed houses sell for about £2.5 million. A more affordable, but equally popular residential area is the Meadows, where a four-bed detached house will go or about £800,000.

Expanding Cultural Scene

There are lots of improvements going on in Dubai to ensure the city is offering what long-term residents and families want. These range from art fairs, film festivals, the Dubai Opera and the Louvre Abu Dhabi. Dubai is very much entering a new phase and while property prices don’t yet match their previous heights of 2008, the chance of another recession affecting prices like this is remote.

According to a report by property consultants Cluttons, Dubai remains the most popular area for property investment in the Gulf.

Dubai Housing Market Shows Signs of Growth

Dubai has a booming property market, especially in terms of rented accommodation.

There has been a significant shift in recent times in the Dubai housing market, if a recent report is to be believed. And it’s one that should be of real interest to prospective investors, as it shows growth in an area that isn’t usually associated with the super-rich image of Dubai.

Encouraging Figures for Growth

Dubai Housing Market Shows Signs of Growth Aspen Woolf

Image credit: Djordje Radovanovic via Flickr

The research – released by dubizzle Property and real estate consultants JLL in their End of Year Property Report for 2017 – shows that sales leads for properties under AED1,000 per sq ft have risen by an impressive 24 percent in the last 12 months. The findings suggest that it is in Dubai’s mid market segment that things are now really starting to move, with well over half of the residential properties that dubizzle Property are listing falling into this category. It’s part of a wider trend, according to Samer Abdin, the company’s general manager.

“Developers in Dubai announced 16 new projects this year – several of them were in the mid-market segment offering attractive payment plans,” he says. “Agencies who are focused on off-plan sales and have inventory that falls under the less than AED1,000 per sq ft bracket are likely to see gains here.”

The First Signs of a Potential Recovery?

Taking an even wider view, the bigger picture in Dubai also seems to be one of encouraging signs of growth in the mid and lower segments of the housing market. It’s no secret that the property market in Dubai has head into the wrong direction in the past, but it appears that the recovery now may well be on its way.

“This is where I believe the market is extremely undersupplied and not adapted to the demand,” says Salah Belkhayat, managing director of property adviser Valuance Consulting. “The prices in that segment are increasing while the rest of the market is still correcting.”

A Real Opportunity for Investors

Dubai Housing Market Shows Signs of Growth Aspen Woolf

Image credit: Maher Najm via Flickr

The research suggests that paying close attention to the differing trends in the distinct sectors of the Dubai property market is a smart approach for investors.

“The Dubai residential market has remained relatively soft during 2017, while there has been little change in average sale prices, rents have continued to decline in most locations,” says Craig Plumb, head of research, JLL MENA. “This disguises variations between different communities and different sectors of the market.”

While many expats in particular may still be earning high salaries, it’s clear that there are a growing number for whom the top-end properties are a step too far. Many have been looking to rent or buy in neighbouring emirates where prices are lower – but the rising demand for affordable properties in Dubai shows that it is still a highly desirable location.

So, while it seems that the higher end luxury market has struggled in the face of low oil prices and unemployment issues, the more affordable parts of the Dubai property market are now bouncing back – presenting potential investors with a real opportunity to take advantage of a sector where demand is increasingly healthy.