The UK still offers a fantastic hedge for retail property investors – Sable International with new partner API Global

Interest rates are going up in the UK and the property market growth in the retail sector has slowed down substantially. So is it still a good destination for South Africans wishing to hedge their investments against instability in South Africa? Migrant specialists, Sable International, say it is. Group international director of Sable International, Andrew Rissik, and the director of the real estate division, Megan Copley, told BizNews about opportunities in the UK, and how South Africans prefer projects with returns in the short term. Rissik believes the UK still offers fantastic hedging for retail property investors and Sable has recently formed a partnership with API Global Solutions, a global property sourcing company, to identify the best areas to invest in the UK. Managing Director of API Global, Mike Leighton, told BizNews how they use market indicators, infrastructure and government spend to come up with the best areas in the UK to invest in, and who they partner with to make it a seamless process. – Linda van Tilburg

Finding a UK partner to source properties for South African retail property investors – Andrew Rissik

As many people know, Sable International has been working in the cross-border investment space for many years, helping South Africans send their money offshore and very often, settling them as well. In February this year, we started our International Real Estate Investment Division, headed by my colleague Megan Copley. The UK real estate market is a very popular market and quite important for investors from all over the world, particularly South Africans who have a very strong understanding and passion for real estate. We made it our business to go out there and understand the market and look for somebody who can work with us to make sure that we’ve got really good stock for a wide range of clients, depending on where they’re looking to invest, whether they’re looking for capital growth, whether they’re looking for a yield generating investment. So that’s where we are. We’ve gone out and found a company run by Mike Clayton of API Global, a professional sourcing firm in the UK, to help us to offer that end-to-end service to our clients. So let me tell you a little bit about API and we can bring our partnership together.

What API Global brings to the party – Mike Leighton

I spotted an opportunity really in the residential sector with it being unregulated, meaning that the professionals don’t necessarily need qualifications in which to operate. So, I spotted an opportunity to take a much more regulated mindset, a professional approach to how residential investment is managed globally and I incorporated API global. I set the business up in 2014. We’ve grown from the first office in Dubai to eight global offices across the five continents now. So, it’s been sustained growth. It’s been a fantastic journey along the way and I believe we’re only at the beginning of it. We’re focssing on the regulators’ mindset. So, wealth management, the financial sector, family offices, they’re really the types of companies, like Sable International, which have a full suite of services for their clients; these are the kind of operations that we want to associate ourselves with and what we do as a business. We don’t direct sales to clients. We provide services and support for partners such as Sable International.

API Global’s USP: Identifying locations rather than individual properties

First of all, we’re a research-led business and the research has more to do with the location in which to invest rather than the individual property. My research team will assess market indicators, things such as government spend, infrastructure projects. A good example of infrastructure projects would be the HS2, which is the high-speed train connecting the capital, London, to the regional cities such as Birmingham and Manchester. What that will do is it will reduce travel time to around an hour. So, it cuts in half the ability to travel from regional cities to the capital, which in turn actually makes it commutable.

One of the knock-on effects of such infrastructure projects is corporate relocations – another market indicator that we will look at when conducting research. Examples are the BBC that has moved from London to Manchester. One of the reasons for planning is that London will be commutable and it’s approximately a third of the cost to operate the business in the regional city versus the capital city. So, from a corporate standpoint, it makes huge financial sense to relocate. HSBC relocated to Birmingham. So that’s another good example.

We also look for things such as population increases, decreases, etc – all these market indicators and market dynamics filter into our research and essentially results in identifying particular locations where we expect to see sustained capital or rental growth. And that’s really what we’re here to do. We want to be ahead of the curve. We want to give investors an opportunity to enjoy both capital and rental growth over the medium to long term period of time.

South Africans prefer new residential property, ready-to-go or nearly built – Megan Copley

We know what the South African purchasers are looking for and that can often be different from a purchaser from the Middle East or Asia. We find that our clients prefer stock that’s nearly built or already built and has a proof of concept in place, which is perhaps a tenant ready-to-go or tenants  already in situ. We can give them an exact number of what their rent looks like, their cost centre can be fixed and mortgages, etc. That’s the  type of product our clients like. So, we work with businesses to find the type of property investments for South African buyers that come to us; the majority of our buyers are South Africans. We also know that what we’re looking for is often stock that’s not as far off-plan, like 18 months to two years. Our clients like  something that’s around six months away.

Inflation is everywhere, not only in the UK, and the country still offers a fantastic hedging opportunity – Rissik

Quite an important thing to note at this stage is properties are a medium to long term asset class from an investment perspective. We are reading in the news – if you read the day-to-day media at the moment, it’s all very negative, particularly around the UK. I think with Brexit and all the sort of COVID-related issues and the so-called cost of living crisis, it’s interesting for me reading the British media. It almost looks as if Britain thinks it’s the only people going through this cost-of-living crisis. I’m in Portugal at the moment. I met some American clients who are buying some real estate through us in Lisbon. And I said to them, why are you leaving the US? And they said, because of inflation. I said, well, do you realise that the US isn’t the only place in the world where inflation is a problem? It is everywhere. And I think that this cost-of-living crisis is being driven by oil prices. But what is important for the South African investor is, if you’re coming from an emerging market like South Africa, that’s got extremely big political issues and all the issues around state capture, corruption, nothing’s really being fixed. There’s a lot of positive talk about the future, but the UK still offers a fantastic hedging opportunity. If you look at the UK historically, even though they are in a tough time at the moment, you’ve got to ask yourself what their capability is for actually managing their way out of the crisis that’s presenting itself to all countries. I’d just say that what you’ve got to do is, you’ve got to take that bet.

Sable International and API Global are conducting a free seminar on property investment in the UK on 24 August at the Vineyard Hotel, Cape Town. Book your spot now for more information on:

  • Why the UK is a great place for South Africans to buy property
  • Key locations to consider – including hidden pockets of value
  • How South Africans can qualify for UK mortgages
  • Rentals and rental management
  • A full explanation of expected cashflow

They hope to see you there for an informative and valuable session.

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