Areas to Invest in for  Rental Property Purchase

(a) London and 6 other  parts of the UK  ..  update (b) International property rental hotspots  .. 6 areas in Morocco..   update In my first article about places which are worth considering for Real Estate Rental Opportunities  ”Where is a good place for real Estate Rental Opportunities”  I covered a number of reasons that can influence the housing market. The more knowledge you have about the local market you are interested in, the better. Many factors affect the price of rental property and their “rentability”. These factors do not apply to one country as they are relevant in any country where rental property is being bought. Now I am going to look at London plus 6 other “hotspots “ in the UK . All these areas  are at the first to be showing signs of “lifting their heads above the parapets” when it comes to increasing demand for rental property. I am also going to look at 6 areas in Morocco, and the rental opportunities that are found there.

(a)  London and 6 other parts of the UK  ( August 2009 )

Currently London is still very popular for property to rent. There are not many quality, furnished properties available, and the trend is for more people to be looking for unfurnished accommodation. The “hotspot” in London at present, for rental property is the East End of London. Recent Survey of England and Wales (August 2009) A recent survey has indicated that the following 6 areas are worth looking at for property purchase:

• Bagshot in Surrey,
• Liphook in Hampshire
• Salford in Greater Manchester
• Gateshead in Tyne and Wear
• Dronfield in Derbyshire
• Ebbw Vale in Gwent

5 Year Growth predictions: Houses : Ebbw Vale (Gwent) 50% Liphook (Hants): 48% Bagshot (Surrey): 44.5% Shefford (Beds) 44% Dronfield (Derbys): 36% York (Yorkshire) 35% Ellesmere Port (Ches): 33% Salford (Manchester): 32% flats & maisonettes: Bagshot (Surrey) 49% Liphook (Hants): 48% Abergele (N Wales): 45% Gateshead (Tyne & W) 33% Altrincham (Cheshire): 30% Why? “Why?” is the obvious question to ask here! In all the above areas, property prices are being predicted to rise quickest over the next 5 years. Each of these areas is showing the following trends

• Growth in local employment opportunities
• New infrastructure projects which will bring employment and better access to these areas
• Increased demand for housing in these areas
• Valuations are “at the bottom” and are starting to rise
• Cost of borrowing is now lower and more attractive
• It is anticipated that house prices will increase by up to 50% by 2014

Please bear in mind that the above price rises are less than the annual prices increases, of up to 30% that were experienced prior to the “credit crunch” and the collapse in housing values. The price increases quoted are realistic and reflect the current state of the property market, although certain properties normally are able to maintain value better than other property types. Most popular property types The most popular property types still are 2-bedroom terraced homes and 3-bedroom Victorian properties. The popularity of rental property like these is increased even further if they are close to good schools, with good amenities and access to train stations.

(b) International property rental hotspots  .. 6 areas in Morocco

This section is going to look in detail at an International country and the areas in that country which seem to be most likely to provide opportunities for rental property portfolios. Morocco : August 2009 Where is Morocco?   ..  It is located in Northwest Africa with both Mediterranean and Atlantic coastlines. It has become a major holiday destination with Tangier as the main passenger harbour in the country. Morocco has currently been attracting interest from property buyers all over the world. The country is fast becoming one of the major holiday destinations in the Mediterranean as it is an exotic location with extraordinary natural and cultural wealth. In this thriving country,  you have a definite choice of climate!

• For a warmer climate chose the Mediterranean coast
• For great wind sport conditions choose the Atlantic coast where you find the “Alizee” winds.

6 Rental property “hotspots” in Morocco (1) Essaouira   (2) Marrakech   (3) Rabat   (4) Tangier   (5) Fez   (6) Saida

1. Essaouira This city is the second most popular destination for homebuyers after Marrakech. Interestingly, property prices are said to have increased by over 200% in the past 4 years! It is extremely popular with film makers (Alexander by Oliver Stone and Kingdom of Heaven by Ridley Scott) It appears that guest house construction has been limited due to the increasing competition for the large hotel chains, but rentals are still a good alternative.

2. Marrakech Marrakech is known as the ‘entertainment capital’ of the country, and has long been the most popular tourist destination due to its year-round desert heat and huge range of tourist attractions. Rental property achieves occupancy levels of 85% or more, making it worth considering for a rental portfolio. Currently,  developers are buying up old houses in the commercial district of Gueliz.  They are knocking down these old houses and building modern apartment blocks  which are in great demand from people from Europe wanting a long week-end break holiday destination. Due to being such a popular destination, Marrakech has very high prices… Best option for value might be to travel into the surrounding countryside, find land and build on it. If you can build near the American school, new supermarkets and  the new 18 hole golf course, you will have a property in demand all year round for rental purposes.

3. Rabat Rabat is the capital of Morocco and has a varied population structure… It also has some brilliant golf courses which you don’t expect!

4. Tangier This a busy seaport on the northern tip of Morocco, with lots of activity in the local markets, a wonderful bay and superb beaches. The city is being transformed at present from an industrial city to a tourist friendly area. There are very good short term letting opportunities to be found here. Very interesting information There are plans to create a tunnel link between Morocco and Europe.

5. Fez Fez is the Florence of Morocco! It has superbly elegant and extravagantly decorated houses.  These houses are part of the best preserved medieval medina in the world. Although it is somewhat quieter than other Moroccan hotspots, it is the ideal place to go to get your hands on a traditional home at a bargain price. Rental property prices can be 50% cheaper than rental properties in Marrakech.  Add to this the potential for an increasing demand for properties, which has seen property prices increase by over 20% every six months. Fez was  once the capital of Morocco. After 1912,  when  Rabat was built,  and hailed as the new  capital of Morocco, many of the inhabitants from Fez moved either to Rabat or Casablanca due to the trade opportunities that were presented 100 years ago. As a consequence,  many properties were suddenly empty and quickly became run down. Now there are many property types for sale. In many cases these properties   offer great opportunities for developers wanting to build exotic hotels, or for people who want to carry out a restoration project. Developing and restoration work is time consuming, and can be an expensive process. Before building work starts a building permit or ‘roska’ must be obtained from the local government office.

• There are apartments available for purchase in the old palaces which were once occupied by the rich trading families of Fez.

• Traditional un-renovated Dars (houses of varying size) are available from anything between £6,800 to £40,580.

• The traditional Moroccan house or palace with an interior garden is known as a Riad, and cost anything from £24,000 to £75,000. They are becoming popular properties to buy.

The fact that Riads are so sought after is reflected in their elevated prices, meaning it is often better to opt for Dars which are easier to attain and are therefore cheaper. The city of Fez should be viewed as an ideal location for long term capital appreciation. Those interested in taking advantage of the growing tourist industry should be cheered by the fact that the Moroccan Tourist Ministry have made it easy for foreigners to obtain licenses to operate bed and breakfasts. Whilst other cities have restrictions on such permits, the government’s aims for this area are as follows :

• To  encourage foreign direct investment,
• To bolster the tourism industry
• To renovate the medina in Fez

6. Saida This resort is only three hours by air from the UK, and enjoys a wonderful Mediterranean climate. Currently it is under construction by one of the largest developers in Spain and has a variety of villas, apartments and penthouses for sale. The increase in tourism is likely to create a situation where demand significantly outstrips supply, and at least over the next five years, capital appreciation should be very good. One bedroom apartments in this area are available from £52,600 and appreciation on these properties is expected to be strong. That concludes my August 2009 update on Potential areas for investment for  Rental Property Purchase