Buy to Let

Should international property be in your portfolio?

While property investments don’t always promise the kind of stellar returns that can be earned on riskier investments, they also don’t come with the downsides. And, over the long-term, all the evidence suggests that property is the best means by which to grow your money.

In fact, while data recently published by Heathstone Investments reveals that, over the course of one year, returns on property investment are eclipsed by those in equities (7% and 12% respectively) – the story is a different one over the longer-term.

Over 10 years, investments in property and equities both return around 8%, while over 15 years, property investments return nearly 12% while equities return less than 8%. So, while property investment doesn’t always contain the highs and lows of other investment, for those looking to make a stable and long-term return on their money, the data suggests it is the preferable option.

With political uncertainty having rocked stock markets and equities in recent years, and with further potential turmoil on the horizon, the case for investing in bricks and mortar has never been stronger. The question then becomes which property to invest in?

For many years, a staple choice for those looking at property investment has been the buy-to-let sector. There are an estimated two million buy-to-let investors in the UK, invested in a private rented sector which is home to more than five million people. The dynamics behind this market have traditionally been strong, and continue to be so as rising property prices mean younger people spend more time in privately rented homes, prior to one day getting on the ladder themselves.

Housing affordability has become a political issue however and the government in recent years has attempted to discourage investment in buy-to-let by raising the level of stamp duty payable on second home and buy-to-let purchases, as well as reducing the amount of tax relief landlords can claim on profits earned through buy-to-let investment.

As a result, increasing numbers of property investors are now looking at the other end of the market – luxury property. There’s good reason for this growing interest. Recent data from Christies International Real Estate reveals a market currently at record levels with the world’s top ten reported property sales all priced above $100m for the first time. And with property investment funds promising double digit returns on luxury investments, combined with a dwindling number of dividend paying shares available to would be investors, it’s easy to see why this new investment class is growing in an era where interest rates and returns on savings around the world remain subdued.

Unlike traditional property investments however, luxury investments may often require more initial capital. While this can be seen as a positive in that greater investment will lead to greater returns, it can also be daunting for somebody new to the market. Furthermore, alongside the question of what to invest, there is also the question of where. With cities from Toronto to Hong Kong selling themselves as the next global property hotspot, this can be more complicated than it sounds.

If you are interested in the luxury property sector, the Luxury Property Show this October (27-28th) at London Olympia is a perfect introduction to the exciting world of luxury property investment and a great opportunity to meet likeminded investors, and explore potential opportunities. Alongside insights into luxury properties and property markets around the world, the show also gives potential investors unparalleled opportunities for networking with fellow investors and property consortiums as well as access to a full programme of seminars aimed at seasoned investors, as well as those who are new to the market.

The luxury property market is growing exponentially at the moment with an unprecedented number of sales topping the $100m mark. As the old adage goes however, early bird catches the worm, and now really is the time for those thinking about investing in this market to take the plunge.

Whether you’re a seasoned investor or a complete novice, there are always questions to be considered and contacts to be made. The show gives an opportunity for investors, developers and the real estate community to come together and discuss the key trends and, more importantly, to match those looking to invest with the right property for them.

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