Written by Jafar Tabaqchali, Arthur Online: With regards to investments, there are multiple areas to look at. Property has always been an attractive area for those looking to invest. The managing director of Sequere Property Investment makes the case that “investing in property not only provides great returns when the deal is right, but it’s also a tangible asset that can be held for capital growth or sold for the profit.”
Within property, however, there are so many different avenues to go down. This article will investigate three of the hottest areas of investment.
A few years ago, the buy-to-let industry was booming. It represented an exciting prospect and many turned to it. However, recent changes in stamp duty were aimed to curb the scheme’s popularity. Increasing the cost of owning a second aimed to make them a less attractive proposition.
However, research from Sequre Property Investment has found that this has made little difference. The Buy-to-let market is dominated by pension ‘pot hunters’ who see it as a superior option to pensions when it comes to future incomes. Young professionals have also been attracted by the market. These affordable homes represent an easier more affordable route onto the property leader. If you fit into one of these two groups, delving into buy-to-lets could provide an interesting opportunity.
When investing in student property, there are two ways to go; either, you look at expensive, luxury, student accommodation or you target cheaper, affordable homes. In 2015, George Osborne lifted a cap on overseas students and that corresponded with a rise in demand for luxury student accommodation. In theory, this represents a higher return for investments. However, in 2017, there has been a slowdown in the growth of luxury student accommodation. Saying that, however, luxury accommodation is still extremely popular. This can be seen through the fact that in September a student property portfolio in Nottingham worth £3.25m was purchased by Nottingham-based MS Estates on behalf of a London-based institution.
Instead, however, there has been an upward trend of investment in smaller HMOs. Analysts say there is increasing appetite for affordable housing and less interest in the luxury smart pads. North America and Asia have led the charge in investing in the £43 billion sector, as a struggling Britain looks to foreign investment to help improve its infrastructure.” A large portion of investors are focussing their investment towards affordable accommodation” said James Hanmer, head of Savills’ student housing investment team.
Countries outside of the UK
Given the constant changes and evolutions seen throughout global politics the importance of diversifying your property portfolio to help protect yourself from adverse changes is significant. In Europe, Spain and Ireland have increased in popularity in years. Scepticism regarding Spain is understandable. Given the property bubble burst in 2007/08, many have been advised to stay away. However, since 2016 economic growth has been coupled with an increase in house prices. A combination of increased demand in Spain’s construction sector and increased lending goes a long way to explaining these changes. Similarly, Ireland has increased somewhat impressive growth in recent years. Irish house prices have increased more in the first quarter of 2017 than the entirety of 2016. One potential region to look at would be North Dublin, the area that has experienced the largest rise in property prices. The Irish Times explains this rise as prospective buyers being “priced out of the expensive South Dublin property market”, forcing them to look elsewhere.
Looking outside Europe, there are opportunities in Asia and Oceania. Within Asia, Hong Kong is currently experiencing the most significant growth rates. When looking at House Price Indexes year on year, there is a general trend demonstrating growth at a sustainable level. Jones Lang LaSalle (JLL), an investment management company, has forecasted continued growth over the next 30 months predicting an increase of house prices by 155. In Oceania, Australia, specifically Sydney, has seen significant growth; in March 2017, Sydney experienced an 18.90% increase in house prices on the previous year.
Whilst these three sectors are not guaranteed opportunities, they do represent interesting prospects to have a look at if you are keen to expand and diversify your existing property portfolio.
Written by Jafar Tabaqchali, Arthur Online. Exhibiting on stand 462 at Accountex 2018.