Despite the economic uncertainty, large portfolio professional landlords ¹ are in a confident mood, with the majority planning to acquire at least one new asset in the coming year, new independent research* conducted on behalf of property business expert Handelsbanken shows.
Other key findings include:
- Six out of 10 are set to acquire more properties in the year ahead
- Of these, over half plan to diversify into new sectors
- 92% expect to see valuations rebound
- London and South East cited as most attractive regions
The Handelsbanken Professional Landlords Survey – based on nationwide research among large UK investors with an average of 29 properties worth c £14 million each – found that 59% plan to expand their portfolios in the year ahead, underlining their confidence in the long-term value of UK property as an asset class. Just 14% expect to sell some or all their properties.
Over half (57%) of those looking to buy more properties also plan to diversify into new sectors, with offices (43%) attracting the most interest as investors look to take advantage of depressed valuations.
The overwhelming majority of respondents (92%) expect the value of their portfolio to increase over the next 12 months, with 39% predicting it will grow by over 20%. Only 8% thought it will broadly stay the same.
James Sproule, UK Chief Economist, at Handelsbanken said: “The bottoming out of commercial property prices in Q1 2023 corresponds with reasonably positive sentiment expressed towards the sector in this survey.
“Commercial property values saw a major correction in the second half of 2022 as a direct impact of the higher interest rate environment. Average retail property prices were down by 15%, office prices were also down by 15%, and industrial unit prices were down by 25%.
“In addition, there are the ongoing considerations around post pandemic working practices and retailing habits which, until they are more settled, will be weighing on commercial property valuations.”
Geographically, three-fifths of respondents expanding their portfolio are also planning to buy in new regions. London was cited as the most attractive region over the next 12 months by investors (27%), followed by the South East (26%). Areas seen as less attractive for property investment are Yorkshire and the Humber and the West Midlands, both attracting interest from only 9% of the sample.
The table below shows how professional property investors rate the attractiveness of regions across the country (landlords could select multiple regions).
|
Region
|
Percentage viewing the region as most attractive over the next 12 months
|
|
London
|
27%
|
|
South East
|
26%
|
|
East of England
|
24%
|
|
East Midlands
|
21%
|
|
North West
|
20.5%
|
|
Scotland
|
17%
|
|
North East & Cumbria
|
15%
|
|
South West
|
14.5%
|
|
Northern Ireland
|
12%
|
|
Wales
|
10.5%
|
|
West Midlands
|
9%
|
|
Yorkshire & The Humber
|
8.5%
|
Danielle Coe, Leamington Spa branch manager said: “As we can see from these results, there's a regional variation in landlord sentiment. The findings highlight how important it is to know the area where you are planning to invest, especially as we can see landlords say they're looking to diversify geographically.
"Because our branches are located in the areas we serve, we have a deep knowledge of the local market and are able to offer property professionals informed advice to allow them to make decisions that work for them. Our customers are telling us that they find it a real benefit to have this expertise 'on their doorstep'."
Read the 2023 Handelsbanken Professional Landlords Survey below.
This report follows Handelsbanken’s inaugural property report (pdf) Opens in a new window in 2022, conducted amongst SME landlords with a minimum of four properties in their portfolio. On average, respondents owned 7.5 properties with an estimated total market value of £2.76 million.
¹ 62% of the sample classified their business as “real estate investment” while 22% classified their business as “landlords” (residential and commercial) and 16% classified it as “property management.
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