Investors should switch their money from residential to commercial property in order to continue benefiting from a superior asset class, says private equity and property investment facilitator Hotbed.
The firm, which matches investors with companies and individuals seeking funding, says yield rates on residential properties have dropped to levels where they are “unsustainable”.
Switching in to commercial property can provide yields at least 2% higher on average, and often provides higher quality tenants than in the buy-to-let sector.
”There is increasing interest in commercial property from individual investors,” says Simon Cooke, head of property Hotbed.
”These investors recognise that buy-to-let has not peaked and are seeking a new home for the capital gains they have made, or a different route for their property investments.”
Capital appreciation of commercial property is more dependent on increases in rents compared with residential property Cooke says.
However, the performance over time is more consistent than residential property, he adds.IFAonline
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