In October 2016, property auctioneers Acuitus held its largest commercial property auction to date with sales of £70.6m, reported BridgingAndCommercial.co.uk that month. Many properties were purchased by first-time property investors.
Richard Auterac, the Acuitus auctioneer, said:
“It’s clear from our sales this year that there is a new generation of investors in the auction room.”
Acuitus has identified this new type of property investor as people looking for higher yields than the low interest rates offered on conventional savings products. There is a high demand for rental properties for both accommodation and commercial buildings. This has kept rents high enough for average yields to exceed the interest from bonds or property funds.
One area of investment growth is the student housing market. For example, in Manchester, yields on student accommodation investments can be over 6%. Another growth area is the South East of England, where many people need to rent because they cannot afford to buy a house.
Investors are also helped by low interest rates on commercial mortgages that can be used to finance commercial property and buy-to-let residential accommodation.
Television programs like Homes Under the Hammer make it look easy to invest in property, but property experts warn that there can be pitfalls. Thorough research on demand, amenities, crime rates and employment rates is needed.
According to financial experts, high returns are available on buy-to-let investments as long as investors do the necessary research and then manage their property portfolio wisely.