Property investors look beyond London for growth

Property investors look beyond London for growth

0:02 AM, 21st May 2024, About a month ago

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Property investors are shifting their focus away from traditional hotspots like London and towards regions offering higher yields, research reveals.

According to Handelsbanken, the East of England is now the most attractive region for commercial and residential investment over the next year (26.5%).

Its ‘Property Investor Report’ questioned investors with an average of 35 properties each and found London has lost the investment crown and dropped to fifth place (21%) – equal to the East Midlands.

The bank says that investors appear to be prioritising areas with better yields rather than established high-demand locations.

‘Factors don’t seem to be jeopardising investors’

The bank’s chief economist, James Sproule, said: “While headlines over the coming months are likely to be dominated by the general election, interest rate cuts and the ongoing cost of living crisis, these factors don’t seem to be jeopardising investors’ upbeat mindset.

“The adjustments to capital valuations, often masked by inflation, as well as increases to rents, have resulted in property once again delivering a premium over gilt yields – and opened up the potential for attractive opportunities as the economic recovery progresses.”

The report also highlights a rise in investor interest in North East and Cumbria (24.5%), the North West (22%) and the South East (21.5%).

This trend coincides with a planned increase in property portfolios with nearly two-thirds (62.5%) of investors aiming to expand their holdings in the coming year.

However, 8.5% of investors say they are planning to exit the market entirely.

Diversification is a key driver for portfolio growth

Geographical and sector diversification is a key driver for portfolio growth, the report also highlights, with residential flats being the most sought-after property type.

Handelsbanken also says that investor optimism is high, with an overwhelming majority (81%) expecting their portfolio value to rise within the next year.

Nearly a third (31%) anticipate a significant increase of more than 20%, while almost half (50%) expect a moderate rise of around 5%.

Wales leads in optimism, with 59% of investors predicting a substantial upswing.

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