The size and diversity of the UK property market means it offers many opportunities for investors to achieve strong returns.
One sub-sector that could prove particularly lucrative is off-plan property – housing developments that are still under construction or yet to begin.
Buyers who know how to mitigate risk and choose the right investment could have a lot to gain from this asset class, as Jerald Solis, Business Development and Acquisitions Director at Experience Invest, noted in a recent article for Build magazine.
Potential to achieve capital growth through steadily increasing house prices is one of the most attractive features of UK property. The market has consistently demonstrated its ability to remain stable through times of uncertainty, such as the 2008 financial crisis and the ongoing fallout from the 2016 EU membership referendum.
The average UK house price was £220,000 last year, up from £157,000 in 2008, according to the Office for National Statistics. This underlines the typical capital appreciation long-term investors have enjoyed.
Scope for price growth is a particularly strong motivator for off-plan property investors. Committing to a development while construction work is still underway, or hasn’t even started, in some cases, provides the benefit of securing a lower-than-average entry price. Developers often offer low prices to encourage investors to commit as early as possible.
Off-plan buyers can secure discounts of up to 20 per cent. Combined with the potential for consistent price growth in popular areas such as Liverpool and Manchester, these low entry prices provide a powerful incentive.
Finding the right project
Individual investors will take different factors into account when evaluating an off-plan project, and one of the most important considerations of all is location.
If the buyer is unable to see the finished property before committing to the investment, they will want to feel confident that the area itself offers good prospects for price growth and possible rental yields.
Liverpool, with its strong student population, and Luton, one of the most popular London commuter hotspots, are good examples of destinations where investors can feel optimistic about securing returns on their outlay.
As Mr Solis pointed out, there are various other issues to take into account when investing in off-plan property, such as build quality assurances and the developer’s track record. Read everything he has to say in the Experience Invest Build magazine article.