Market Overview

Hands off investments are a hit with foriegn investors


London has seen its property markets inflate due to the interest and demand from some of the wealthiest investors in the world. This has seen a shift in interest from London to a number of other UK cities where there has been less of a buzz which has resulted in property prices staying relatively low.

However, those properties at the higher-priced end of the market have been quickly purchased by extremely rich investors from overseas – mainly Russia, Gulf States and China. The total investment in 2013 went beyond £100bn.

This move to other cities has seen investors looking for a ‘hands off’ investment that is managed such as a residential property, retail units and the ever increasing student accommodation. This allows investors to get a foot into the UK property market without having to visit the property. The management company will deal with all aspects of owning a property such as collecting rent and maintaining the property. This means that the investor can simply leave them to deal with any issues efficiently.

The tax climate in the UK has made it a favourable place to invest for foreign investors as many countries continue to implement measures that help to improve and speed up the economic recovery. One factor that is helping to push up property investment figures is student numbers. According to student property market specialist Pure Student Property, there has been a real hunger for study in the UK from both residents and international students and the demand is increasing year on year. Director Mark Burns said, "This year saw a record number of applications to universities which is an indication that the student property rental market is also going to benefit from this increase."

There is a real short supply of student rooms in cities such as Leeds, Sheffield and Sunderland and only 13% of students have the ability of being able to use purpose built accommodation. For the investor is this great news as it means that rates can be increased without them ever having seen the property. Despite investors leaving the management of the property to the professionals they do still have control over the investment that they have made and they usually put in place exit strategies that are extremely flexible.

Purpose built student property is now becoming even more appealing to students with stunning designs and included extras that result in a higher demand, which leaves investors with the potential of being able to secure even better yields. This is not the only positive factor, due to the high prices in London and interest shifting to regional cities with popular universities, guaranteed rentals are highly likely for the long term. This works on two levels for the investor, as it not only gives them a constant income but it also gives them the possibility of a simple exit plan should they need it due to the attractive nature of these properties.

Things have improved in recent times and the attractive potential of a hands-off investment has meant that investors have the ability of being able to achieve an immediate income that is proven.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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