Income investment is an attractive option for anyone who wants to make their money work for them. It can deliver returns to help with everything from paying the bills to saving for retirement.
UK property has traditionally been a highly appealing asset class for domestic and international investors, owing to its reliability and the strong, consistent returns on offer. This continues to be the case, despite recent causes of uncertainty for British business and the economy, most notably Brexit.
Anyone looking for income investment opportunities in UK real estate at the moment should be aware of the key underlying principles of this form of investment, such as the importance of portfolio diversification.
Fortunately, the British property market is nothing if not diverse, with excellent prospects to be found in alternative segments such as hotel suite investments.
The need for a diverse income investment portfolio
If you are planning to invest for a regular income, it’s essential to have a diverse portfolio. The simple reason for this is that reliance on a particular asset class leaves you exposed to deterioration in the value of that investment.
With a diverse portfolio encompassing a number of different segments, you can feel more confident of receiving regular returns, with gains in some classes offsetting potential losses in others.
UK property certainly offers a lot of potential for diversification, with alternative asset classes recently demonstrating they have just as much to offer as mainstream residential housing.
One of the most attractive spaces of all at the moment is the hotel sector, with recent research from PwC showing that hotels across UK regions have experienced monthly increases in average daily rate (typical rental income per paid occupied room) since April 2013. Further growth is expected this year, while overall occupancy rates are set to remain at a record high of around 76 per cent.
The hotel market is offering a lot of choice for investors, with provincial locations set to see nearly 22,000 additional rooms arriving in 2019. Consequently, there will be plenty of opportunities available to those investing for income.
Investing for a monthly or quarterly income
One of the most appealing aspects of income investment is its potential to deliver regular returns. This is particularly beneficial if you’re looking for investments that pay monthly income or quarterly to maximise the immediate benefit from the funds at your disposal.
Check out this investing for monthly income calculator for more information.
The UK hotel sector is the source of many opportunities to secure higher-than-average rental returns. The Epic Hotel and Residence in Liverpool, for example, is currently offering ten per cent net per annum, assured for ten years.
This particular property is also distinct in that it is the first luxury hotel to emerge in the Baltic Triangle, one of the most trendy and popular parts of modern-day Liverpool.
Prospects like this provide an insight into what UK property – and especially the hotel market – has to offer people looking to gain regular income from their investments.
One of the most compelling signs of the potential of Britain’s hotel sector in particular is the interest it is attracting from all over the world.
According to the latest research from Knight Frank, international investment in UK hotels totalled approximately £4.9 billion in 2018, more than double the previous year’s figure. Interestingly, London didn’t dominate the overall picture last year, with an even split of funds invested in the capital and the regions.
The research highlighted a number of factors that fuelled this growth in overseas demand for UK hotel investment, including:
● The ongoing strength of the global economy at the start of 2018
● The attractive value of the pound for overseas buyers
● The liquidity of the UK property market
Europe was the leading source of foreign investment in UK hotels in 2018, accounting for more than a quarter (27 per cent) of all transactions, followed by the US (21 per cent), the Middle East (13.6 per cent) and East Asia (four per cent).
Knight Frank also offered some positive predictions for future performance, stating: “Even if there is little or no currency movement as a result of Brexit, we envisage overseas capital inflows in the UK hotel market to remain buoyant, as greater strategic importance is placed on investing in alternative specialist sector businesses.”
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Finding the right destination
Once you have settled on the UK hotel sector for your next income investment, another key decision to make is what location to invest in.
There are certainly many attractive options to choose from all over Britain. Some of the biggest potential benefits can be found in Liverpool, which was ranked third in the Colliers International 2019 UK Hotel Market Index, having moved up eight places from its position a year earlier.
The north-western city topped the charts for growth in revenue per available room (RevPAR) between 2015 and 2018. Its RevPAR rate of 7.3 per cent was significantly higher than Edinburgh’s (6.1 per cent) and Belfast’s (six per cent).
Marc Finney, head of hotels and resorts consulting at Colliers International, said the UK hotel sector as a whole is clearly in good health at the moment.
He added: “The UK hotel market adds about 10,000 new rooms each year and this has increased in pace recently, with almost 18,000 new rooms expected to open in 2019. This leaves hotels as a rare bright spot in a property market which is facing challenges in other sectors.”
With such encouraging trends underway and locations like Liverpool going through a particularly exciting period of growth and change, there’s no denying the great potential on offer to anyone seeking income investment opportunities in the UK hotel sector right now.
Discuss your next income investment
For more information about investing for income, book a no obligation meeting with Experience Invest. Our knowledgeable and friendly team will provide you with information on the best options currently available on the market. Alternatively, you can read the latest Experience Invest reviews on our Yell.com page. You can also leave us your feedback on the Experience Invest reviews page of Facebook.