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The UK real estate market has been popular among overseas investors due to their historical stability in politics and economy. But with Brexit, Covid-19, and the global recession, the real estate market has been on the downturn for many years. As the market has shown signs of recovering, are there any opportunities left? Today, we have Urosh to share his view. In this episode, we covered some major key questions that a lot of people have, such as the impact of COVID-19 and how the British National (Overseas) visa scheme impacts the market.
Urosh Teodorovich is the General Manager at Locations Real Estate. Locations is a Hong Kong-headquartered boutique property agency that offers expert advisory in overseas investments in addition to HK local market real estate services. His team consists of industry experts with extensive experience in the sector which gives clients confidence and peace of mind in making their decisions – whether that’s buying a £9 million penthouse in Central London or upsizing to a new rental property in Sai Kung.
- Why invest in the UK property market?
- Which areas to look into?
- Why invest now?
- Who are the potential investors?
- What to keep in mind while investing?
As it can be difficult to catch some minor errors, transcripts may contain a few typos or inaccuracies.
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Terminology & Source:
BREXIT Referendum: BREXIT is the acronym for British Exit and it refers to the UK’s decision to leave the EU.
Buy-to-let Investment: Buy-to-let investment, also known as invest-to-let is the process in which investors buy properties to rent it out to make profits from tenants’ rents.
BNO [British National Overseas] visa scheme: The BNO visa scheme allows eligible candidates to apply for a residence visa to live, study and work in the UK.
Stamp Duty: Stamp duty is a kind of tax that is imposed in the form of stamps on legal documents by the government while buying a property.
Stamp Duty Holiday: A stamp duty holiday that is supposed to run till March 2021 was announced by chancellor Rishi Sunak, meaning homebuyers in England and Northern Ireland will be exempt from stamp duty when buying homes up to £500,000.
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Alright, let’s get back to the transcript of the show. Enjoy!
Darren: Hey Urosh, welcome to the show.
Urosh: Hi, everyone, I’m Urosh Teodorovich. I’m the general manager at Locations real estate. Locations is a Hong Kong headquartered boutique property agency which offers expert advisory in overseas investments, as well as also in the Hong Kong local market. Our team consists of industry experts with extensive experience in the sector which of course gives our clients peace of mind in making their decisions. Whether that’s buying a £9 million penthouse in Central London or upsizing to a new rental property in Saikung.
Darren: Yeah, this is a very exciting topic because I’m sure we all know here that the ties between UK and Hong Kong are very strong. And then I was looking for someone from UK to tell us more about what’s going on because there has been a lot of things happening in the UK for the past couple years. And a lot of people are more and more interested in looking to UK investment. So thanks coming in. And thanks for making the effort to be and share with everyone here.
Urosh: My pleasure. Thanks very much for the invitation.
Darren: Yeah. So to start with, for people who might not be familiar with UK, would you mind briefly explaining to the audience the breaches in the UK that oversea real estate investors tend to invest and at the same time, how do you distinguish the area in terms of risk and reward?
Urosh: Sure no problem. Obviously, it’s one of the most important questions that gets asked. I would say broadly speaking, UK investment typically centers on London, it always has – capital city, it makes sense. But in recent years, this has developed into other very important second tier cities. I’d say that after London, I’d say Manchester then Birmingham and Liverpool have been core areas of focus. Now, when you mentioned risk reward, of course, this will depend somewhat on the needs of the individual investor and what their requirements are and in a sense how much they’re willing to expose themselves to risk. So, broadly speaking, let’s say the more blue chip investment areas, so, you know, looking at prime central London so even someone unfamiliar with London would be familiar with places like Knightsbridge and Chelsea and what have you. These sorts of areas on a longer timeline will usually be safe, but they might not have the same percentile game potential is that’s a fringe redevelopment areas. So places like Stratford or Ealing, which are along the cross rail project in London. Or for that same logic, any of the Northern powerhouse cities such as Manchester, Liverpool, Birmingham, which I’ve already mentioned, but of course, any potential upsets market will likely impact those areas first, and it depends on always, you know, the need to liquidate an asset at short notice. So anywhere where there is always going to be you know, a stronger demand in those kind of blue chip areas, they will be safer but it’s such that they demand higher prices.
Darren: Hmm, that’s kind of cool because like in Hong Kong, right, obviously, we see a lot of real estate opportunities from different places in UK. And like obviously, I think this episode’s focus is more on the big picture and I think maybe in the future like in round two, we can do specific different regions because in real estate the most important thing is, how do we know where or which place has opportunity miles away? So with those areas you just mentioned right, are there any areas you think are overrated or underrated?
Urosh: Well, so I actually mentioned Knightsbridge by name, so that actually brings me a good point into what I say is perhaps the more overrated but I’ll need to explain a little bit more detailed. So the ultra-luxe or what we could also describe as the super prime areas – these world famous parts of London I mentioned Knightsbridge you Harrods department store is extremely popular with, you know a lot of our Far Eastern buyers who might know that as their key London landmark, more so in Buckingham Palace in some respect. But in these areas, you’ve got prices per square foot which are comparable to Hong Kong’s top residential areas. And yet most of these properties come without gyms with pools or any of these other facilities by comparison. So I would say that these can be seen as somewhat overrated, overrated especially with the prices that they command. But that being said, in the current market conditions transactions are down roughly 53% according to a recent report, and Bill prices in areas like Knightsbridge itself have fallen as much as 33% from the previous peak. I personally think this kind of price drop for the people that really really want to be in these ultra primaries could reinvigorate demand as people start hunting for these ultra-luxe bargains.
On the other hand looking at, let’s say the more underrated side. Now this will be a bit of an interesting one because it’s not so much an area so much as a type of investment I think is a bit underrated. So I’m sure as anyone who has even started to consider looking at overseas investment, they will know that you can’t go to any hotel in Hong Kong on a weekend, perhaps now with the Coronavirus. It’s a little bit different but in normal times, you would go in every single exhibition room, whether one was in the Excelsior, the former Excelsior Hotel in Causeway Bay, all the way to the Mandarin or the Marco Polo on Kowloon side. You can’t go to any exhibition room without there being a property exhibition and that could be Bangkok. Could be London, could be Manchester, could be New York could be LA, Sydney, there were projects all over the world. And I would say that the sheer number of UK developments being sold off plan across Greater China so including, you know, not just Hong Kong, but Shanghai, Beijing, what have you. I think the number of these developments coming out where they’re, you know, of course, every agency that is putting up these projects is going to say that they’ve got the best project in London or the best project in Manchester. And so I know from personal experience speaking to a number of my clients that many have found it difficult to navigate the options available. And this is actually where I think expert advice becomes most important. I would say that because some people have tended to get a bit put off by off plan or a new build investment. I would say that to consider this: If an investor has no intention of ever living or using and living in or using a property for themselves, then I would say that new build projects in both London and in the north of England can often be bought at this exact unusual time with fairly substantial discounts. And these properties also in most cases come with, let’s say 5 to 10 year builders guarantees for the property anywhere in like I said anywhere from five to 10 years depending on the project. Now, given that everything is new in a new built, this makes for a very low hassle investment because landlords over in Hong Kong or Shanghai or Guangzhou or wherever, they don’t need to worry about boilers stopping working, or radiators leaking or old copper wiring that needs to be replaced, or any of these other very real and very important issues that can face buyers who purchase a period property by comparison. So for this reason, I think yes, there’s a lot of different projects out there but with the right advice, choosing the right project can be a very sensible and shouldn’t be I don’t think it should be sidelined as a potential investment option.
Darren: Thanks for the detailed explanation because like I told you before I used to work in the fund, a real estate fund that focuses on UK asset too and I felt that they’re pretty similar when it comes to like UK asset because, you know, there’s a lot of things changing in the past couple years and I think that right now it’s a good time to go in, which obviously we talked about UK market you cannot not talk about Brexit still and what kind of impact – Yeah, I mean, we both know it’s a long impact, but you know, how has it changed since the Brexit has formally confirmed and then from the past and currently your outlook, how does Brexit impact the market in your point of view?
Urosh: So I think there are two ways to look at this. Look, from my personal perspective, I think that Brexit really shook up the market most with the initial referendum back in 2016. Okay, I think that that’s probably where the biggest repercussions felt, let’s say on on the property side, as you know, working within the industry and helping clients to invest overseas. That was the time where we saw the biggest impact that would affect your average investor, let’s put it that way. I mean, since then, I would say that the most major effect that’s been happening, you know, that has happened or that you know, will continue to be the case is that the GBP has been kept extremely low. There’s a lot of pessimism about the UK, you know, about its economy, about the political future about trading opportunities and so forth. And as a result, it’s kept the sterling at a very low level essentially for the last four years, and I would say that on top of all of the excellent reasons that there are to invest in the UK, interestingly enough, one source, I’d recommend Sables, they’ve got an excellent research team. And on their blogs recently, they’ve been doing a series of posts, I’d recommend any one of my clients or anyone interested in this aspect to go check them out. Because they talk about the price of acquiring, holding and selling properties at off the top of my head, I believe it’s $650,000 US dollars equivalent, $2 million US dollars equivalent, and then I think they do an ultra-luxe series of five or ten, I can’t quite remember the top one. But this is a very useful guide because what it shows is that Britain typically and London specifically ranks in the cheapest to buy, hold and sell of any of the major world cities I mean, when you think about Hong Kong stamp duty, it’s London, even at the top tier for luxury properties, it’s a veritable bargain. But I would say that from the Brexit perspective, you’ve got this currency play angle. So, on top of all of the other reasons to invest in the UK, you know, ultimately, it’s stood through many different issues historically. And, you know, Brexit is just whether one is for or against, it is simply seen by most as just another thing that will be you know, that will be addressed, handled, and that ultimately is just another step on the sort of route forward, she’s a bit of a cliche but yes.
Darren: Yeah, that’s good. You know I now think time is this right Brexit is one other variables, how about COVID-19 because I remember that a lot of people I know who works for UK deal, they said that like, “Oh before Covid, it’s been getting really popular and then the market died again from COVID-19.” So it has been a while already, and then how has the virus impacted in the real estate market? And then where are we right now do you think?
Urosh: Well, I’m always happy to say this to clients right now is I get to give you some news with a big smile, which is that for a rare situation, I would say that really Coronavirus has in the only possible small benefit I can see has given a situation where it is much more of a buyers market at this time. I think that you mentioned about your own contacts. I’ve seen exactly the same thing. I’m calling you know my associates in London from when I was in Hong Kong or calling you know, and now seeing on the ground here in London the situation. I would say that very simply it froze the market. I think when it went into lockdown down a lot of people were really excited they were talking about this Boris bounce, you know that the market was bouncing back, transactions were going up and there was a real atmosphere of positivity earlier this year. Then unfortunately of course, Coronavirus happened, it’s caused huge impacts not just to the UK but worldwide. And I think that the simplest way to describe this is even deals which were quite far along were ground to a complete standstill. And I think that many sellers as a result, you know, let’s put it this way. They all thought, “Okay, fine. It’ll be one month, maybe of lock down.” Then one month passes, “Okay, maybe two months” and I don’t think anyone anticipated it would quite go on as long as it has. Why is this good news for any potential buyers? Well, a lot of sellers are increasingly motivated to sell for different reasons. And as such, I would say that buyers coming in from overseas are in a slightly more emboldened position in that they, you know, I think until recently, Hong Kong had a much less detrimental Coronavirus situation than comparable other Western European or even, you know, sort of North American locations. But what I would say is that with these buyers coming in from Hong Kong, they have the opportunity now to be quite aggressive in their offering. And I think that that is the discount levels that I’ve been able to achieve off of asking price for my clients is something that I haven’t seen. I don’t think I’ve seen this sort of level in the last five to eight years easily.
Darren: I see. Yeah, you know, I found a lot of people are more urgent recently. I think they talked about a lot about the stamp duty changes. And would you also elaborate on that as well and how it will impact the real estate market.
Urosh: So, the way that this stamp duty holiday works is actually very simple. It is a measure that was introduced to boost the transaction volume, which I actually mentioned earlier that there was a recent Coutts, which is the bank that they produced a report saying that transaction volumes were down in the region of 53%. Now, obviously, in a move to bid to increase in a bid sorry to increase the number of transactions in the market, the Conservative government here has implemented this stamp duty holiday. Now this applies to any properties which are purchased but which complete before the 31st of March, on or before the 31st of March 2020. Now this I would say as as expert advice I would say that this is great for anyone looking at particularly into Manchester or Birmingham or Liverpool because at £500,000 of course you could find different properties in London but they might not be as centrally located but with a budget of £500,000 pounds really you can have the sort of top tier ultra prime of Manchester Birmingham or what have you. Now, these properties up to half a million pounds sterling are completely Stamp Duty Free provide they complete so that means the project complete and it’s ready to live in before the 31st of March 2020. However, and this is an important however that I think is a distinction a lot of you know buyers in Hong Kong or across Greater China would be interested to know. Unless you are a first time buyer looking to live in that property and are a British subject, overseas buyers, and or second home buyers are what they call landlords, so buy to let investors will still have to pay the usual additional 3% stamp duty on their acquisition. So, it’s important because I would say that people telling investors that it is completely without stamp duty, even if they’re, you know, an investor based in Guangzhou, who is never going to live there and just wants to rent it out. There will still be some stamp duty requirement. But that’s not to say that they aren’t saving a pretty substantial amount of money by purchasing within this window. So as a result, I would say all transactions that we’ve been doing for the most part have been below £500,000 and in the north of England, but that has been for buyers wanting to take advantage of the stamp duty aspect.
Darren: I see. No, it’s good, because like you clarify a lot of things that I have questions for too. And then, you know, we both know, I’m in Hong Kong and you cannot not ask us this question is that how would the new the BNO (British National Overseas) visa scheme like, you know, potentially impact the markets because I think that’s a topic that I told my friends about asking you this question, they’re like, “Oh, my God, this you have to ask, I don’t know what hell is going on.” So would you like to elaborate on that?
1-2 minutes cut off, Urosh re-answered question
Urosh: Sure, actually, I’d be very happy to answer this question because of course it’s something on everyone’s minds at the moment, the newspapers, both in Hong Kong and in the UK are reporting heavily on this new BNO scheme due to start next January. We ourselves, Locations Real Estate has partnered with a top immigration solicitor here in the UK to offer initially free consultation and then advice on the quickest path to take on to Japan. But I would say that the simplest way to describe what the impact of that will be as far as I see it, is that having spoken to a number of my clients and especially some of the more conservative ones, because of course, this is a political hot topic. I think the international political wrangling of this, you know, we don’t have – I wish I had one but I don’t have a crystal ball. I can’t see in the future as to what different you know international superpass will do. But assuming that the BNO visa program is able to go ahead, I would say that even on a conservative basis, my clients anticipate in the region of 100,000 to Hong Kong, Chinese families, who would likely take advantage of this and as a result, relocate to the UK. Now, if you figure that the average Hong Kong Chinese buyer from I can say anecdotally, from my experience, but I, you know, many of my colleagues and I have always prepared notes on this, generally speaking, Hong Kong Chinese buyer goes in for £750,000 up to around 1.2 million, if they’re buying a buy to let investment in London. Now, if you times, you know, even the midpoint of those numbers by 100,000, it starts to become quite a bit dramatic number, and that’s the amount of money that is potentially going to be coming into the UK market. And, you know, Hong Kong people, I’m guilty of this myself having, you know, been born and bred in Hong Kong and I’m living there for three generations, we are used to a city where we have very close public transport where everything’s easy to get to. And I would say that we expect that anywhere we’d really want to go, we should be able to get there in about 15 minutes. London of course, it’s very massive geographically so it’s quite different. As such, I think the biggest impact is going to be that Prime areas, very convenient locations, areas which are desirable, are probably going to be targeted quite heavily by these incoming buyers. Now, that said, Hong Kong buyers, in my experience, are extremely savvy and they’re very good at sniffing out a good deal. And I would say that, you know, I mentioned that I thought that super prime in some cases was overrated, and I stand by that, but I would say that on the other hand, being clever and navigating the market such that, you know, if you know that a road over here will be, you know, £3000 per square foot, but just a seven minute walk over this way. It might be, you know, £1005 or £2000, or what have you, you can actually buy tactically and end up living in some of London’s very very good postcodes without having to pay that top dollar for it. And I would say that in some respects you know, what Locations have been doing is creating that link between London and Hong Kong such that even for buyers who are less familiar with it, we can explain what London is like in terms of Hong Kong and I think that having that you know, that local market knowledge on both sides is incredibly important.
Darren: Yeah, for sure. I think that’s the struggle with investing in UK because people have a very emotional tie, people in Hong Kong and at the same time people keep forgetting that it’s not Hong Kong. So there are a lot things that it makes sense to us in Hong Kong, how it works, it doesn’t necessarily make sense in UK and they need someone on the ground that actually understands UK to explain to people in detail like, hey, maybe if you’re living there, it’d be different than you actually investing or how is it like, what is it going to be like and what should you do about it, which comes to my next question right, what advice and tips can you give the audience if they’re interested in investing in the UK properties, regardless if they’re from Hong Kong or China or somewhere else?
Urosh: So I know this might seem like a cliche or like a marketing pitch from someone in the industry, but honestly, I can’t stress this enough. Have a good agent. I think making sure that you have a good rapport with, you know, whomever you have as your agent and making sure that they understand your personal requirements and objectives. Too many agents will send absolutely anything to all of their clients all the time and you know, the kind of hopefully something will stick approach. In most cases, you know, I’ve spoken to a lot of my clients and their previous experience was that agents would send them anything and anything and anything. And eventually, the hope was that the client would actually choose something because they were exhausted not because they found something they actually wanted. This is what I would describe, frankly, as a bad agent, but unfortunately, it’s a very common practice. Now, from the client side, I’d say that a tip for what they can do as well as themselves is to communicate, to be clear with your agent. Always ask as many questions as possible. And this might seem crazy, but be as specific as you can. I would be from my experience working you know, in this sector and especially dealing with ultra high net worths, where they tend to get the best opportunities at £25, £30, £35 million mark, the reason they find these amazing properties and they find the ones that are right for them is because they’re willing to spend an hour, an hour and a half, two hours, just talking about what they want and what more importantly, they don’t want. And a good agent will listen to all of this, take this all down. And we’ll never put a property in front of a client that they don’t think that they’ll like. And the very best agents will actually be able to say, “Look, this isn’t quite what you – this isn’t quite what you said you were looking for, but I think you’ll like it, have a look, what do you think?” And that kind of relationship is totally invaluable. And frankly, it really doesn’t matter whether a client is buying for £200,000 in Liverpool, or whether a client is buying for £50 million in London. At the end of the day they should should be getting the same quality of service and they should also be getting the same quality of advice.
Darren: That’s really good because I think that’s what Denzity also wants to do, because we felt that there’s a lot of bad players out there. There’s good players, great players. There’s a lot of bad players and a lot of people keep forgetting that you have options. And hopefully someone like you – we’ll find more people like you to help more clients and help more people because reality is that, you know, it’s very hard sometimes to understand these concepts because real estate is not something that everyone knows about it. Everyone has a familiar experience with it. So I just want to say thanks for your time because there are a lot of things that even in my head I might want to go into deep detail. But before we go right, would you mind telling the audience how they can find you and reach out to you for more details and more surface?
Urosh: Certainly, so if you’re interested in finding out more about investment opportunities in the UK, or if you’d simply like to arrange a free real estate consultation, please feel free to contact me directly. I’m Urosh, my number is +85262768567. And I can be reached by that by caller, by WhatsApp. Or you can email me at Urosh.email@example.com.
Darren: Yeah, and I have everything in the show notes. And then obviously, I’ll include everything you just said. And I want to say thanks for your time. I’m sure a lot of people who watch this will appreciate your insight because like, even a lot of things you said before, it’s different than other guests we have. You’re very detailed in explaining to people and really want them to understand what’s going on so I hope that you’ll come back for round two in the future and then again, thanks for your time.
Urosh: It’s absolutely my pleasure and I look forward to the next time we’re able to speak on a maybe even more specific topic.
Darren: Yeah, for sure. Well, thank you so much.
Urosh: My pleasure. Thank you very much. Speak soon. Bye bye.
Urosh: 大家好，我是Urosh Teodorovich。我是Locations公司的總經理。Locations是一家總部設在香港房地產代理機构，為海外投資與香港投資者當地市場。我們的團隊由行業專家組成，在這一領域擁有豐富經驗，這當然給我們的客戶帶來信任。無論是在倫敦市中心買一棟價值900萬英鎊的頂層公寓，還是在西貢的一處新的出租房產。
Urosh：當然，我很樂意回答這個問題，因為現在每個人都在想這個問題，香港和英國的報紙都在大量報導這項定於明年1月開始實施的BNO新計畫。我們自己，Locations Real Estate已經與英國的一比特頂級移民律師合作，提供最初的免費諮詢，然後就前往最快路徑提供建議。但是我想說的是，就我看來，最簡單的方式來描述這將產生什麼樣的影響，就是在與我的一些客戶，特別是一些比較保守的客戶交談後，當然，這是一個政治熱門話題。我認為國際政治爭論，你知道，我們沒有-我希望我有一個，但我沒有一個水晶球。我不知道將來會發生什麼不同的是，你知道國際超級通行證可以。但假設BNO簽證計畫能够在前面，我要說，即使是保守的基礎上，我的客戶預計，香港的中國家庭大約有10萬人，他們可能會這樣做的好處是，遷移到英國。現在，如果你認為香港中國買家的平均水準，根據我的經驗，但我，你知道，我和我的許多同事一直都在準備這方面的筆記，一般來說，香港的中國買家出價75萬英鎊以上如果他們在倫敦買了一個買一賣的投資，大約120萬。現在，如果你乘以，你知道，甚至是那些數位的中點到了100,000，這個數位開始變得有點戲劇性，這就是可能進入英國市場的資金量。而且，你們知道，香港人，我自己對此感到內疚，你們知道，在香港出生和長大，我在那裡生活了三代，我們是過去是一個公共交通非常便利的都市。我想說的是，無論我們想去哪裡，我們應該能在15分鐘內趕到那裡。倫敦當然，它的地理位置非常大，所以很不一樣。囙此，我認為最大的影響是在黃金地段，非常便利的位置，理想的區域，很可能會成為重點目標這些新來的買家。現在，也就是說，以我的經驗，香港買家非常精明善於嗅出一筆好買賣。我要說的是，你知道，我提到我認為在某些情况下，超級素數被高估了，我堅持不過，我想說的是，從另一個角度來說，如果你知道這裡會有一條路，每平方英尺3,000英鎊，但從這條路走七分鐘就到了。它可能是，你知道的，1005英鎊或2000英鎊，或者你擁有什麼，你實際上可以在策略上購買，最終住在倫敦一些非常好的郵遞區號，而不必為此支付最高的一美元。我想說的是尊敬的各位，您知道，我們在倫敦和香港之間建立了聯系，即使是對那些不太熟悉的買家來說熟悉這一點，我們可以解釋一下倫敦在香港的情况，我認為，擁有了這一點，雙方的本地市場知識非常重要。