In a context of steadily rejuvenating house prices, a weakened Sterling encouraging foreign purchasers to buy British and tentative indications of growth in 2013, several big players on the global investment markets are looking to property to supply the returns they need in 2013.
Investment giant Caisse, Canada’s largest pension company, has expanded its real estate investment fund by $10bn, indicative of a move away from low-yield bonds and towards global property. No doubt with London’s prices on an ever increasing trajectory, some of this injection of cash will come the UK’s way.
Caisse’s move has not been isolated, however, and many investment companies and funds are looking to property to reduce exposure to volatile stocks and shares whilst replacing lost income and underwriting the value of their investments with dependable capital assets that almost certainly will not depreciate to nothing in a crisis.
Their focus is on a wide variety of investment opportunities, including traditional buy-to-let, student accommodation and locally led joint ventures. Sectors on the rise include agricultural land, which provides stable income from lease payments and an appreciating long-term capital value as the availability of suitable farmland and development land diminishes.
It’s not only big investors getting involved, but small private investors can make substantial returns from buy-to-let investments. Hotels have posed an interesting prospect recently, presenting an opportunity for capital growth combined with operational income.
Prominent industry expert Andrew Milligan, the Head of Global Strategy at Standard Life, was reported indicating that property could be the ‘surprise’ performer of the next decade, indicating that returns from property would be better than from shares. At this point in time, rental yields already sit at 6%, compared with an average income of 3.5% from FTSE 100 companies.
With the future looking progressively brighter for the UK economy – the latest forecasts putting GDP growth at an improved 0.7% – investors seem to finally be willing to once again put their money into the wide range of opportunities British property has to offer. Setting the stability benefits that property brings against the volatility of shares; this looks set to continue.
Chartered Surveyors are experts in the buying and selling of property. If you are looking to follow the current trend and invest at the bottom of the market, contact your local surveyor to make sure both that your investment is at the right price and that your new property doesn’t throw up any nasty surprises.
SRJ / LCB