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Insight & Opinion

Why diversifying your property portfolio is a wise move

Author: Gemma

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If you’re looking to get maximum returns from property investment with minimum risk, it’s worth considering portfolio diversification, an approach that has delivered results for many investors in the past.

If you’re looking to take an approach to property investment that minimises risk and gives you the best possible chance of strong returns, it’s definitely worth giving some consideration to portfolio diversification.

Building a broad and diverse portfolio is a good way to reduce risk, since lower returns or performance in one area can often be offset by stronger results in another. Committing to just one type of investment can leave you overly exposed to volatility or unpredictable trends in that space.

In the property sector, you have options to diversify by asset class or location.

Asset class

The UK property market is a diverse and dynamic space, offering plenty of choice for investors and opportunities to benefit from trends in various asset classes, from mainstream housing to niche segments like student accommodation and hotels.

While residential buy-to-let has an established track record for delivering steady returns, the UK student housing market has gone through a period of particularly fast growth and profitability in recent years.

Investors who diversify their portfolio across various asset classes are the best-placed to benefit from positive trends in certain segments, and also better-protected from risk and short-term downturns.

Location

House price trends in recent years have shown how widely price growth can vary between cities and regions, even in a small country like the UK.

Places like Liverpool and Manchester in the north of England have witnessed relatively strong and consistent growth recently, according to Hometrack research, while London and the south have seen much slower progress.

Again this illustrates how investors who diversify their portfolio – by location, in this case – can broaden their options to ensure they’re seeing maximum benefit from various trends and fluctuations in the market.

Book a one-on-one consultation with Experience Invest or give us a call on +44 (0)207 834 1113 to discuss options for diversifying your investment portfolio.

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