Commercial property investing can be profitable, but some sectors are more profitable than others. If an investor can spot an emerging trend they can purchase property at good rates, with the expectation that both capital growth and rental income will significantly rise.
Property sectors tend to go in cycles. At the start of the cycle, property is relatively cheap and this is the best time to buy with a commercial mortgage.
One current trend is student accommodation. With the number of students attending Britain’s universities expected to increase, there is a constant demand for student accommodation. Investors have been pouring substantial amounts of money into student accommodation during the last few years. According to Graeme Todd partner at DM property surveyors, even with the expected demand for student accommodation, the market could be reaching saturation point.
One property sector that Todd believes is at the start of a cycle is build-to-rent accommodation in city centres. An increasing number of people want to live and work in the centre of towns and cities. Many young people cannot afford to buy their own home or want the flexibility of renting so that they can easily relocate if they find a better job.
Many professionals want good class accommodation and are prepared to pay higher rents for flats in blocks that have extra facilities such as shared communal areas and high-speed internet connections.
In many European countries, renting is the norm rather than homeownership. Britain could be heading in the same direction.