Highlight: Alternative property
When it comes to investing in property, the two areas that naturally come to mind are commercial and residential.
Investors, however, could benefit from drilling further into the sector and investigating niche areas of property investment, such as student accommodation, hotel rooms or offshore investments.
According to research published by Knight Knox International, for example, the number of student accommodation projects across the UK is rising.
Data from CBRE shows that nearly £800m was invested in student housing in the first half of 2012, more than double the amount invested in the same period last year.
Jo Winchester, head of student housing advisory at CBRE, says: “There is no shortage of investor demand, but the market is hampered by a shortage of new high quality development opportunities. Proposed changes to the Reit [real estate investment trust] regime, together with the significant increase in the number of new operators in the last four years, could widen opportunities for indirect investors by creating a greater choice of investment funds, as well as creating an alternative exit position for established operators.”
Similarly, investing in a hotel room – or unit, as it is more commonly referred to – can be an alternative to a traditional buy-to-let investment from which an investor can rake in 50 per cent of earnings (see pages 33-34 for more on both student accommodation and hotel rooms).
“Hotels are the perfect hands-off investment for anyone looking for a long-term opportunity in property,” says Joe Daniels, property consultant at Knight Knox International.
“Investors do not need to worry about maintaining the property, unlike a traditional buy-to-let, in addition to the advantage of receiving a higher monthly rental income.”
The latest IPD Pan-European Hotel Performance report reveals that the UK produced an average year-on-year total return of 10.4 per cent in 2011, a 3 per cent increase on the returns generated by the rest of Europe.
Of course, these types of niche investments are not for the faint hearted, but certainly worth considering when it comes to allocating part of a portfolio to the property market.