With rising interest rates outpacing rental income, insured investors in short-term rentals are finding it difficult to make a real profit. With the prediction of another recession approaching, the domestic tourism industry will only benefit, with people putting holidays abroad aside, short city breaks in the UK will become much more desirable, allowing investors to make hay while the sun shines.
Investors make huge profits by becoming hosts on Airbnb, using these platforms to attract a wider audience. Of course, that will come with more empty periods and less certainty.
With so much uncertainty in the market with interest rates no one knows if they will go up or down so it is important to know that you are not just buying any property in any area with this new form of investment. The most important factor with this is location, location, location!
With the 90 day rule in London, this means you can only achieve a maximum occupancy rate of 24.65%. Our investors are seeing success in cities like York with 85% occupancy, Liverpool reaching over 73%, and Manchester looking to grow 61% in 2023, with Salford Quays growing steadily. These are all current and future UK hotspots for short term rentals / serviced accommodation.
Cash investments
Not all investors will want to mortgage their properties and in these uncertain times security and stability are of paramount importance, especially when so much capital is at risk. Year after year, our Gites Landal satisfied investors with huge fantastic guaranteed rental income.
A hands-off guaranteed rental investment that generates passive income, giving you the peace of mind that you can earn income, essentially without having to do anything about it. The companies involved are constantly growing and looking to dominate the market in their field, and succeed in doing so, which says a lot about the future of these investments.
Most promising city/place to invest
In my opinion, next year will be the best year for investors to take advantage of prices in Liverpool. I’ve seen the city grow so much since I moved here two years ago. And with fewer post-Covid restrictions allowing the construction industry to move forward at a rapid pace, I expect to see huge progress with the Liverpool Waters project. According to the Land Registry, house prices in Liverpool rose by 13.8% against 12.8% recorded nationally. Over the past five years, prices in the city have gone up 46%.
Investing is always about timing, so investors who have bought into Liverpool so far have amassed huge amounts of equity. After 2023 it will still be a good time to buy here, as prices will still be lower than in places like Manchester, Birmingham and certainly London, but don’t let that thought make you wait to invest here. The sooner you add Liverpool to your portfolio, the more lucrative it will be later on.
Should we invest in the 2023 real estate market?
Research is essential to success and to generating profitable returns – as any successful investor knows. Investing is a long-term process, and while 2022 has shown continued instability, previous recessions have demonstrated the UK’s long-term resilience.
By riding the wave of economic change over a long period, investors will see excellent returns with both short and long-term investments despite recessions. The unpredictability of the economy and the impact it will have on the real estate market in 2023 does not mean that you should completely change your investment strategy, but you may consider adapting it accordingly to take advantage of the next year’s trends and opportunities, to continue investing profitability in the real estate market 2023.
With staycations set to gain popularity again next year, first accelerated by the pandemic and then by the rising cost of living in 2022, the UK holiday market is set to reach a record high of £275 billion. sterling by 2025. 2023 would be a great time to invest in a UK short term rental in order to see the most capital growth.
Additionally, as Dan pointed out, cash investments will grow in popularity as they allow investors to combat the rising mortgage interest rates we’ve seen in 2022. Not to mention that rising rates interest comes with increasing demand from tenants choosing not to buy. 2023. According to Zoopla, with demand for rental accommodation up 46% and supply down 38% in the UK, rental prices are expected to continue to rise next year. The 2023 real estate market will allow investors to capitalize on this rising rental demand.
The best strategy for an investor to achieve their goals in 2023 is to set specific investment goals and create a roadmap for achieving them based on research and market trends.
If you wish to be accompanied in the development of your 2023 investment roadmap, Click here to book your free, no obligation call with Dan or one of our industry experts at Advantage Investment. Make investing easier for you in 2023 and set yourself up for success!
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