2020 Round Up on Property Insights by property investment experts Shojin Property Partners

Posted by Shojin Property Partners on 27th November 2019 -

It’s that time of the year. Everyone is looking forward to a good Christmas break and to recharge for what will be a very exciting 2020. The UK elections loom and, I think I speak for most of the country now, in saying that I am sick and tired of listening to politicians.

They got us into this mess that is Brexit without any clear plan. Now they are all fighting because everyone has a different view of what Brexit means and how to implement it. Everyone, it seems, voted for something different to the next person and nobody really understood what it meant.

The fact is that nobody knows what will happen post-election and how 2020 will pan out. The one thing for certain though is that life will go on. There is always investment opportunity in the market and, with the weak pound and having endured several years of uncertainty, 2020 will be an interesting and exciting year.

Below you will find 10 areas to focus on based on our front-line view of the market.

1. Student Accommodation

This market may have peaked as a whole, and several large players are exiting the sector and taking profits. Schemes are moving into the “long-term stable investment” category.

That being said, in prime university locations, there is still increasing demand, with a combination of more students, and the dwindling supply of local housing being used for students. Local councils are putting the squeeze on local landlords in order to improve quality and return houses back to the local community.

Top tip: Choose the right locations for long term stable income with some upside.

2. Co-living & PRS — Private Rental Schemes

The UK is moving towards a rental market. The 1980s, 1990s and 2000s was all about people buying their own property. More recently, however, there has been a shift back towards long-term rentals. The reason is primarily affordability, but also out of choice.

Many young people prefer to live in vibrant all-rental schemes for the community element.

Further, young people prefer to remain socially mobile and be able to move cities and countries at the drop of a hat. Long term homeownership doesn’t work well and, with low rental yields, the cashflows don’t work if they need to move somewhere else and rent out their home. Prices are no longer shooting up, so we don’t see the long-term capital growth play either.

Top tip: The large investment funds are heavily moving into this space and so should you.

3. Prime Central London

Many are starting to call the bottom of the market. Over the past few years, prices have softened due to supply and demand.

Much of the foreign money that was supporting this part of the market dried up, especially with Brexit uncertainty. However now, with prices lower and the weak currency, opportunistic investors are coming back in.

Top tip: Prime Central London provides value, but it is a long-term investment. Don’t expect quick profits.

4. Cities outside of London

Many cities outside of London have seen tremendous growth and for good reason. It is cheaper for young people to live and work in these cities, and it is cheaper for multinational corporations to base themselves outside of London as long as they have access to good talent.

Over 50% of graduates each year are now choosing to work in cities outside of London. Cities such as Manchester, Liverpool and Birmingham have been transformed with new apartments, vibrant city centres and good transport links. We still see further opportunity here.

Top tip: Cities outside of London are proving to be a good investment opportunity.

5. Downsizer apartments

Many elderly couples are living in houses that are simply too big for them. Their children have flown the nest and they don’t need all that space. The problem is that there are not enough bungalows or down-sizer apartments for them to move into.

As a result, they stay where they are. This squeezes the housing stock and drives up prices for young families, who need more space but cannot afford to upsize. The government is keen to support the down-sizer market, and where there is government support is where the smart money goes.

Top tip: Look for investment opportunities that are geared to down-sizers.

6. Assisted living facilities

The UK has an ageing population so more elderly people will need to move into assisted living facilities where they can maintain their independence but have help available to them when needed. This also creates a community for the elderly who might otherwise be living alone.

Top tip: Invest in senior living facilities, either as a development or into the assisted living business itself. The market is only going to get stronger.

7. Nursing homes

As the elderly age further, they will need proper, around-the-clock care. This would be provided in nursing homes where they could be properly looked after. There are not enough care homes in the UK, whether it be homes run by the council or private care homes. Many are also run down and dated and lack modern facilities.

Top tip: Invest in care home development or care home businesses.

8. Hotels

The hotel business has changed, and guests are now looking for an experience rather than just a room to stay in. This has given rise to boutique hotels which offer an enhanced experience. The location will always be key in cities, but destination hotels are also in high demand. We are seeing lovely properties come to market as the owners are ageing and they are ripe for an innovative makeover to attract more guests at a higher price.

Top tip: Look for opportunities in boutique hotels, especially in cities like London.

9. Offices

There is still strong demand for offices, especially in good locations near to transport hubs. Refurbishing dated offices in the WeWork-style, with nice communal areas (although not necessarily beer on tap). The WeWork model is easily replicated, and many smaller companies are doing just that.

Top tip: Buy into run-down offices to increase the revenue and capital value.

10. Commercial properties

Large properties on long-term leases with top-rated comments are always a good investment. Unfortunately, the yields tend to be quite low. However, there is opportunity in commercial properties where there is an angle to add value. Perhaps building an additional floor or two.

Top tip: Look out for undervalued and under-utilised commercial property.

The above areas of focus are an observation of what we are seeing in the market at the moment. However, with the uncertainty of Brexit and the upcoming elections, this could change. That being said, property will always be a solid investment and a good asset class to store and generate wealth.

If you would like any further information about investment opportunities in the UK, please visit our website www.shojin.co.uk or find us on Facebook, LinkedIn and YouTube.