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Insight & Opinion

As London peaks, investors are starting to look outside the box

Author: Gemma





The luxury London property market – it’s been the focal point for many investors for years now. Having withstood the falling prices that were seen throughout much of the rest of the world in the wake of the financial crisis, and bringing in substantial growth ever since, the city has become something of a haven for investment.

But is this tide starting to change? Ever since the financial downturn, London has been one of the most popular investment cities in the world – it recently usurped Hong Kong for top spot – thanks to the pace of price rises. However, 2014 hasn’t been one of the fastest on record, and this could be a sign that the market in London is peaking at last.

Prices are now at a level 41 per cent above their pre-crisis peaks, but in 2014, they have climbed by just three per cent, below the 8.5 per cent average in evidence across the country as a whole. It suggests that the market in luxury London property is about to reach its plateau, and this is sending investors off to look for assets elsewhere.

At the same time as experts such as Scott Corfe, chief economist at the Centre of Economics and British Research, suggest that demand for luxury property in the capital is falling substantially, the level of investment in the buy-to-let sector in particular is still growing.

In the past year, the number of people buying to let has climbed by 32 per cent according to the Bank of Ireland UK, as the value of buy-to-let stock has soared by 13.3 per cent, set to smash the £1 trillion barrier at some point in the next few months.

And with yields that are still hovering around five per cent on average indicative of how well the market has retained strength, showing that it offers long-term health and possibilities for landlords, buy-to-let is clearly an asset that many are now looking to get into.

Luxury buy-to-let in the regions is becoming more popular because it can offer investors the chance to get high-quality stock at prices below market value. This increases the level of returns that people can make both in terms of rental yield and capital appreciation.

An example of this can be seen at the Skyline in Barnsley, where Experience Invest offers units at up to 23 per cent below market value, giving buyers a fantastic long-term option. Purchases the likes of this and Princess Street in Manchester give investors access to passive income, which is also attractive to those looking to make a profit without having to be in constant contact.

The managed properties are controlled without the need for the landlord to worry about maintenance and repairs or even finding a tenant, and offer a guaranteed return of between 7.5 and 8.0 per cent for a set number of years, which means investors can rest assured that their investment is bringing in money.

Luxury student property also offers a wonderful opportunity for those looking to invest outside London in the same way. Because of the level of demand for this sort of property, investors are able to get their hands on wonderful units that are fully managed and offer a guaranteed return of 10 per cent for five years in the likes of Queensland Place through Experience Invest.

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