It has been another stellar year for London property, which continues to attract foreign investment at record levels, in both its residential market and its commercial developments.
The latest figures from the Office for National Statistics showed house prices in Britain’s capital rose by 12 per cent over the year to October, with the average house price in the capital now £437,000 (Dh2.62 million), compared with £257,000 across England.
The rise of the London housing market is being underpinned by a flood of money from across Europe, the Middle East and Asia.
The cash has flowed to the capital as rich individuals have feared for the safety of their wealth elsewhere in the world.
But with public finances in the United Kingdom remaining extremely stretched, there is pressure on ministers to make sure that overseas investors are paying their fair share.
There have also been concerns that a house price bubble in London is being exacerbated by an influx of foreign money.
So this month the chancellor of the exchequer, the government’s finance minister, announced a heavily trailed move to make overseas investors pay capital gains tax (CGT) on the sale of their UK property from 2015.
It has been dubbed the “oligarch tax” and is predicted, by the treasury, to raise £125m over the next five years.
Previously, foreign resident owners had to pay no CGT, compared with 18 to 28 per cent for UK residents selling a property that is not their main home.
Will McKintosh, who is the head of the property consultancy Jones Lang LaSalle’s Middle East and North Africa residential business and based in Abu Dhabi, is confident that the move will not deter serious Emirati investors from buying London property.
“Many of our buyers in this region are buying for long-term investments. At some point they may sell, but equally they may not. Many will buy property in London and keep it vacant all year – so they are not really bothered about the return they can get,” Mr McKintosh, who has been working in the region for almost a decade, says.
“There remains amazing enthusiasm for London from our Emirati clients. Bricks and mortar is close to the overall culture here and people aspire to own property in London.” One client owned 15 properties in one project and that was not unusual.
The average purchase price for McKintosh’s clients who buy London properties is between £1m and £1.5m and at this level of the market, there has been little concern shown over the proposed changes.
Indeed, of all the things that could turn investor sentiment off London – the recession, shortage of property, inadequate transport, fears over the weakness of the City or fears of departure from the European Union – it is rare for these to be mentioned.
Mr McKintosh says: “Out of 100 buyers, perhaps five might raise something about the European Union or the City, but it will not stop them from buying anyway.”
His colleague, Adam Challis in London, agrees that the market is unlikely to react with any significant sell-off. “International buyers chose to own London property for a wide range of reasons that extend well beyond the current treatment of CGT.”
However, Mr Challis argues that a greater problem is the uncertainty introduced by the government’s period of consultation and the impact the tax changes may yet have on new development, which is already in short supply in the capital.
“The continued focus on increasing the tax burden on high-value property and the wealthy is unhelpful to the UK’s long-held openness to international investors. The UK taxation system is already very progressive and there will come a point, as occurred with the high rate of income tax, where increased burdens are counter-productive.”
Mr Challis argues that overseas investment in new residential supply is vital. “In a post-credit crunch world, to trigger development finance a certain proportion of sales (usually about 30 per cent) must take place first. Now it’s not owner-occupiers who buy off-plan, so without investors many developments would be unviable. Put simply, no investors, no supply – or certainly a lot less,” he says.
Jones Lang LaSalle estimates that about half of all new build in London last year was bought by overseas investors, representing somewhere between £4 billion and £5bn in investment, or 5,000 to 6,000 homes. To be clear, new build represents 13 per cent of all transactions in London (16 per cent by value) so it’s still just a fraction of the total market – but it’s still a pretty big deal.
London now competes in a global market for investment into property and if the increased CGT liability becomes a discincentive for buyers, there are plenty of other cities that will relish the opportunity to win a sale away from London.
Ultimately, Mr Challis says, slapping 28 per cent tax on non-voting foreign owners may not result in an increased tax take, but in lower investment across the board.
Rob Perrins, the managing director of Berkeley Homes, one of London’s most successful housebuilders, recently called for government to step back from a piecemeal approach to property taxation. He made a similar point: “Don’t think in terms of increasing the tax burden on a small cake. Attract investment and make the whole cake bigger.”
Niccolò Barattieri di San Pietro, chief executive of Northacre, the developer behind some of London’s most expensive residential developments including the Bromptons in Chelsea, says: “Overseas purchasers keep the development industry in business, creating employment and investment in the construction sector. Many developments built over the last five years would not have happened at all without international money funding this construction.”
Kim Vernau, the chief executive of BLP Insurance, is similarly concerned that the measure could dissuade foreign investors from coming. “The government intends to conduct a thorough investigation of this measure early in the new year and we hope they consider the dangerous signal this move would send to foreign investors,” he says.
But Liam Bailey, head of global residential research at Knight Frank, the property consultancy, is less concerned.
“It is important to note that this brings the UK into line and levels the playing field with other markets like Paris and New York, where equivalent taxes can reach 35 to 50 per cent, depending on the owners’ residency status.
“Tax is not the primary driver for people buying in London – although it will now have to be factored in. For most investors their main reason for buying in London is their belief that it is a safe bet in terms of economy.
“It’s fair to say that five years ago London was very benignly taxed for foreign residents, now it is much closer to other global cities.”
Meanwhile, one property website has predicted that UK house sellers could increase asking prices by 8 per cent in 2014. Next year’s growth is expected to outpace 2013, according to Rightmove, which measures the price sellers advertise their properties for, rather than the achieved sale price.
House prices in most parts of the UK remain below their 2007 peak, but are rising fast. According to Halifax, the nation’s largest mortgage lender, prices are up by an annual average of 7.7 per cent this year, the biggest annual increase in six years.
The gap between house prices in London and the rest of the UK is now at the highest level recorded and records look set to be broken again next year.
business@thenational.ae
MATCH INFO
Uefa Champions League final:
Who: Real Madrid v Liverpool
Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine
When: Saturday, May 26, 10.45pm (UAE)
TV: Match on BeIN Sports
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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Mohammed bin Zayed Majlis
Opening Premier League fixtures, August 14
- Brentford v Arsenal
- Burnley v Brighton
- Chelsea v Crystal Palace
- Everton v Southampton
- Leicester City v Wolves
- Manchester United v Leeds United
- Newcastle United v West Ham United
- Norwich City v Liverpool
- Tottenham v Manchester City
- Watford v Aston Villa
RESULTS
Bantamweight
Victor Nunes (BRA) beat Siyovush Gulmamadov (TJK)
(Split decision)
Featherweight
Hussein Salim (IRQ) beat Shakhriyor Juraev (UZB)
(Round 1 submission, armbar)
Catchweight 80kg
Rashed Dawood (UAE) beat Otabek Kadirov (UZB)
(Round-1 submission, rear naked choke)
Lightweight
Ho Taek-oh (KOR) beat Ronald Girones (CUB)
(Round 3 submission, triangle choke)
Lightweight
Arthur Zaynukov (RUS) beat Damien Lapilus (FRA)
(Unanimous points)
Bantamweight
Vinicius de Oliveira (BRA) beat Furkatbek Yokubov (RUS)
(Round 1 TKO)
Featherweight
Movlid Khaybulaev (RUS) v Zaka Fatullazade (AZE)
(Round 1 rear naked choke)
Flyweight
Shannon Ross (TUR) beat Donovon Freelow (USA)
(Unanimous decision)
Lightweight
Dan Collins (GBR) beat Mohammad Yahya (UAE)
(Round 2 submission D’arce choke)
Catchweight 73kg
Martun Mezhulmyan (ARM) beat Islam Mamedov (RUS)
(Round 3 submission, kneebar)
Bantamweight world title
Xavier Alaoui (MAR) beat Jaures Dea (CAM)
(Unanimous points 48-46, 49-45, 49-45)
Flyweight world title
Manon Fiorot (FRA) v Gabriela Campo (ARG)
(Round 1 RSC)
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
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pakistan Test squad
Azhar Ali (capt), Shan Masood, Abid Ali, Imam-ul-Haq, Asad Shafiq, Babar Azam, Fawad Alam, Haris Sohail, Imran Khan, Kashif Bhatti, Mohammad Rizwan (wk), Naseem Shah, Shaheen Shah Afridi, Mohammad Abbas, Yasir Shah, Usman Shinwari
What is dialysis?
Dialysis is a way of cleaning your blood when your kidneys fail and can no longer do the job.
It gets rid of your body's wastes, extra salt and water, and helps to control your blood pressure. The main cause of kidney failure is diabetes and hypertension.
There are two kinds of dialysis — haemodialysis and peritoneal.
In haemodialysis, blood is pumped out of your body to an artificial kidney machine that filter your blood and returns it to your body by tubes.
In peritoneal dialysis, the inside lining of your own belly acts as a natural filter. Wastes are taken out by means of a cleansing fluid which is washed in and out of your belly in cycles.
It isn’t an option for everyone but if eligible, can be done at home by the patient or caregiver. This, as opposed to home haemodialysis, is covered by insurance in the UAE.
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THE BIO
Age: 30
Favourite book: The Power of Habit
Favourite quote: "The world is full of good people, if you cannot find one, be one"
Favourite exercise: The snatch
Favourite colour: Blue
RUGBY CHAMPIONSHIP FIXTURES
September 30
South Africa v Australia
Argentina v New Zealand
October 7
South Africa v New Zealand
Argentina v Australia
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
Top investing tips for UAE residents in 2021
Build an emergency fund: Make sure you have enough cash to cover six months of expenses as a buffer against unexpected problems before you begin investing, advises Steve Cronin, the founder of DeadSimpleSaving.com.
Think long-term: When you invest, you need to have a long-term mindset, so don’t worry about momentary ups and downs in the stock market.
Invest worldwide: Diversify your investments globally, ideally by way of a global stock index fund.
Is your money tied up: Avoid anything where you cannot get your money back in full within a month at any time without any penalty.
Skip past the promises: “If an investment product is offering more than 10 per cent return per year, it is either extremely risky or a scam,” Mr Cronin says.
Choose plans with low fees: Make sure that any funds you buy do not charge more than 1 per cent in fees, Mr Cronin says. “If you invest by yourself, you can easily stay below this figure.” Managed funds and commissionable investments often come with higher fees.
Be sceptical about recommendations: If someone suggests an investment to you, ask if they stand to gain, advises Mr Cronin. “If they are receiving commission, they are unlikely to recommend an investment that’s best for you.”
Get financially independent: Mr Cronin advises UAE residents to pursue financial independence. Start with a Google search and improve your knowledge via expat investing websites or Facebook groups such as SimplyFI.
Company profile
Company name: Suraasa
Started: 2018
Founders: Rishabh Khanna, Ankit Khanna and Sahil Makker
Based: India, UAE and the UK
Industry: EdTech
Initial investment: More than $200,000 in seed funding
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
MATCH INFO
Karnatake Tuskers 114-1 (10 ovs)
Charles 57, Amla 47
Bangla Tigers 117-5 (8.5 ovs)
Fletcher 40, Moores 28 no, Lamichhane 2-9
Bangla Tiger win by five wickets
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
SPECS
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