Investment in property in the UK is a popular venture at the moment. With recent reports showing that the market is in its strongest position since 2005 in terms of growth, and demand from both buyers and tenants remaining high, investment in property has become a strong alternative to more traditional asset classes.
But how do you make a success of an investment? There are a number of factors that any investor needs to consider before they make the commitment, including the type of property they want to buy and when to capitalise on market conditions to increase chances of success. However, one of the most important things that needs to be considered is where to buy investment property.
Where are the best places to buy in order to make a strong return on your investment?
For most people looking to get into the investment sector, London is the shining beacon that will be calling out to them. However, when it comes to the reality of buying for profit, it’s actually often better to look to the north, where entry levels are lower and the returns are higher than in the capital.
Places like Barnsley and Manchester are fantastic examples of this. With average property prices in the north-west city of Manchester sitting at around just £135,000, it enjoys returns that can be more than two times the national average. The average rental yield in the city at the moment, according to HSBC, is 7.98 per cent.
Compare this to London, where expensive central areas like Fulham and Hammersmith are attracting yields of just 2.8 per cent, and it’s easy to see why the savvy investor would do well to look towards the north and away from the traditional safe haven of London.
Strong student markets
There’s a reason student property has become a strong asset class in recent years, with each of the last three years now having seen investment levels top £2 billion. Quite simply, the yields that can be achieved are some of the best around, provided you are looking in the right places.
Much like with buy-to-let homes, it can be better to steer clear of the likes of London, where entry prices are very high and offer lower yields, instead turning to places where student numbers and property returns are rising, such as Luton and Liverpool. With three main universities, Liverpool has 50,000 students, and this has meant demand has swelled.
Thanks to its strong student sector, investors in Liverpool are able to welcome yields of up to eight per cent. And it’s the same story in other popular student areas in the north and Midlands of England, with the likes of Manchester and Nottingham performing particularly well for investors.
Commercial property is one of the asset classes that many people will forget about, especially at a time when the residential sector is performing as strongly as it has been for the past couple of years.
However, in recent times, the improving financial situation for companies, especially since the economy returned to a period of growth in mid 2013, has meant that the likes of offices, retail units and industrial spaces have all become more popular and profitable.
In fact, for 2014 so far, commercial returns have climbed as high as 17.8 per cent. It is predicted by Property Magazine International that by the end of the year, this total will have hit a rather impressive 19 per cent, giving investors a lot for their money.
In general, the UK offers a fantastic opportunity for getting into property investment for anyone who is looking towards a new asset class. As we mentioned, this year has already seen some of the strongest growth since 2005, which is why the UK remains a safe haven for investment.
And it looks set to be a similar story in 2015. According to predictions from Marsh & Parsons, those investing for capital gains nationwide could see their investment grow by as much as five per cent next year, while the average rent is expected to climb by as much as ten per cent, pushing the yields investors are able to achieve ever higher.