How To Navigate The UK Property Investment Market In Q3
As with the rest of the countries in the world, the United Kingdom’s property market is one of the main drivers of the economy. This, despite the slight dip in the country’s gross domestic product (GDP), contracting at 1.6% in the first quarter (Q1) of 2021, per Office for National Statistics.
Overall, the UK property market is projected to be stable in 2021, especially with the continuing COVID-19 vaccinations towards the third (Q3) and fourth (Q4) quarters of 2021.
Despite the economic contraction, UK’s capital London is still the second-best property market prospect in the entire European continent in 2021, next only to Germany’s Berlin—according to the Urban Land Institute.
Ahead, you’ll find out the current market briefs about the UK’s property sector performance and how to invest smartly in the third quarter (Q3).
Brief Market Performance Of UK’s Real Estate Sub-Sectors
Property Investment companies are still looking at the UK market favorably, despite mixed projections and actual Q1 and Q2 performances, as can be gleaned from the points below:
Industrial Properties Performance
According to Cushman & Wakefield, logistics and industrial leasing remained robust, displaying a 115% increase as compared to Q1 of 2020 – with a total of 12.5 million square feet rented out to retailers, delivery companies, and third-party logistics firms.
An economic powerhouse in London, as well as South Wales, has seen demand from temporary relocators in the film industry. This rosy performance from the sector is echoed by the CBRE Group, Inc., which in its report mentioned that returns from retail parks and industrial properties showed strong performance in January-June 2021.
Housing Prices Performance And Forecast
Property listings site Rightmove foresees a house price incline of 4% for this year although other firms project a steady performance before picking up in 2022. On the other side of the spectrum are the UK-based economic firm EY Item Club; which projects a 5% decline, and the Office for Budget Responsibility –which predicts a dip of as low as 8% this year.
At the height of the pandemic in 2020, housing prices have actually increased in London, and regions such as East Midlands, Outer South East and Northwest, Yorkshire and Humberside, and West Midlands, according to Global Property Guide.
For the first half of 2021, though, the student housing and the build-to-rent residential sectors remain strong, according to real estate services and investments firm, CBRE Group, Inc.
If you’re looking to invest in a housing property, take a look at these locations for better yields. It’s not known if these figures include the costs for rental properties.
Office Space Performance
Office space leasing increased to 42% versus last year’s first-quarter performance, and the demand is seen to increase as the economy continues to recover from its pre-pandemic state. With regard to the most suitable locations, offices in the West End and London showed stable performance, while the South East and regional cities show a downtrend. Prime estates in Greater and Ex-Greater London also showed strong performances for the first half of 2021.
The said areas should be your main focus if you want to spend on office spaces to include in your investment portfolio.
How To Invest Smartly On UK’s Property Market
There are several things to consider before investing in a property, these three basic rules can help you:
- Choose A Property to Buy in Areas with Strong Demand
Favorable areas with high leasing prices were earlier mentioned. This shouldn’t only be your main focus. Instead, look for properties in locations where the demand is steep—especially for rental properties. According to most players in the sector, rental properties prefer to rent out rather than purchase homes in the UK, owing to high prices.
- Focus On Motivated Sellers
Some landlords are likely to sell their properties due to losses related to new government schemes. For instance, the eviction ban, which extends the period of ejection of non-paying tenants from the usual two months to six months.
For some property owners who have cash inflow problems, this can be a good time to sell the property—and fast. Such motivated sellers should be your priority when deciding to invest.
- Ensure Profitability
Studying the economic and market performance, movement, and projections, are keys to finding a property that’s sure to produce favorable yields. Out of the capital cities –where properties may be skyrocketing– set your sights in areas that are grooming to be the next economic hub. This way, you can buy low and sell high.
The Bottom Line
Global economies continue to be impacted by the virus, two years after it was detected. The property market has experienced mixed results overall, but that doesn’t prevent prospective investors in the UK to shun real estate spending. Find out what makes a great property deal and don’t just invest when the overall economy is highly positive. Sometimes, the best time to invest may just be during an economic downturn; when sellers are in a rush to sell properties.
As posted on realtybiznews.com