For those planning to enter the UK property investment market in 2019, arguably the most important decision to be made is what segment to invest in.
Given the size and diversity of the market, there is a lot of choice, from long-established asset classes such as residential homes, to alternative options like hotel rooms and student accommodation.
Recent research conducted for Experience Invest has provided an insight into the UK property types that hold the strongest appeal for investors this year.
Residential new-builds attract interest
It will come as no surprise that houses and flats – two segments that make up a large proportion of the UK property market – topped the list of attractive asset classes for investors. Two-thirds (67 per cent) of respondents said they were considering investing in houses in 2019, while more than half (54 per cent) were looking at flats as an option.
Some of the most notable trends emerged elsewhere in the results, with 39 per cent of investors showing an interest in the residential new-build sector, making it the third most attractive asset class this year.
This is certainly a sector where buy-to-let investors can rely on strong demand from the private rental market, with the limited supply of available housing in the UK meaning new-build developments typically attract a lot of interest from tenants.
Some of the highest levels of demand can be found in commuter hotspots such as Luton.
Fresh investment opportunities are emerging all the time, with figures from the National House Building Council showing that 43,578 new-builds were registered between July and September 2018, a 15 per cent increase from a year earlier.
Student accommodation appeals
Another key finding from the research showed that around a quarter (24 per cent) of investors were considering a purchase in the student accommodation sector.
This is an asset class that has proven its potential to deliver strong returns in recent years. Figures from CBRE covering the year to September 2018 showed a 6.5 per cent increase in capital values, bringing total returns to 12.3 per cent, while net rental growth was 3.4 per cent.
According to Knight Frank, the purpose-built student accommodation sector is due to reach a combined value of more than £53 billion by the end of 2019.
Student accommodation is a particularly attractive option for investors seeking regular, reliable rental yields, owing to the consistency of demand from people coming to study at the UK’s higher education institutions.
Figures published by UCAS in February 2019 showed that a record 38.8 per cent of England’s 18-year-old population have applied to start a course this year. The number of international applicants from outside the EU also reached a record high of 63,690, while EU applications rose by one per cent.
Visit Experience Invest to download Experience Invest’s full report, Uncovering the UK’s 2019 Property Investment Hotspots and to find out the latest investor trends.