Savills has predicted that the UK property market will be a lucrative investment opportunity over the next five years. The property consultancy has identified eight asset classes that are expected to deliver annualised returns of over 8% between 2024 and 2028.
The top performing asset classes are predicted to be residential buy to let properties in the North West, industrial property in London, and retail warehouses, with returns ranging from 8.5% to 9.2%.
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Savills acknowledges the challenges that landlords face, such as higher taxes and regulations, but believes there is still significant opportunity for investors who are less reliant on debt. Specific regions, such as the North West, are expected to see strong returns due to projected rent growth. Savills also suggests that the private rented sector (PRS) will face competition from institutional landlords investing in Built to Rent (BTR) and purpose-built student accommodation (PBSA).
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Overall, Savills predicts a stronger outlook for the property investment market in 2024, with stabilizing interest rates, but notes that returns will be driven by income potential rather than capital growth. The firm also forecasts that house prices will begin to grow in 2025 as the cost of mortgage debt declines over the next five years. This is expected to increase activity levels among home buyers, who have been hesitant in the face of market uncertainty.
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