As to be expected with any area of this size, there are a multitude of investor opportunities available, but one trend that deserves particular acknowledgement is the strong demand for student accommodation across the southwest.
Why invest in the region?
The southwest is home to a number of sought-after universities, with Plymouth standing as the tenth largest in the UK with over 31,000 students. Needless to say, this has created significant student let activity, providing great investment opportunities within the area. Houses of Multiple Occupation (HMOs) are a popular choice with investors around Plymouth, and with students dominating the rental market, they continue to prove strong generators for business.
The southwest in general has good affordability of housing stock compared to other regions, and Plymouth is home to an abundance of older style housing, which can be purchased relatively cheaply and renovated in order to hold or sell on. More sought-after areas, like Exeter, are more expensive. The average loan sizes for Shawbrook across the area range from £180,000 to £200,000. Both Exeter and Falmouth boast large university populations, leading to significant student accommodation development, with some cluster blocks being built on the outskirts of urban areas in order to meet the high demand.
Types of investors
The majority of investors are either property investors or professional landlords, with a significant number of clients holding student-type portfolios. Plymouth and the southwest have fewer expat investors compared to areas like London, which has a notably different demographic. Many investors in the southwest are retired locals, or long-term residents who have made a lifestyle choice to move to the region and open their own business such as a B&B or hotel.
There is generally a good opportunity for investors in the region to make a reasonable return. However, student accommodation is not always welcome as recent and on-going debate in Plymouth illustrates. Council tax has caused some controversy with student property exemptions affecting the local population by seemingly reducing the income generated for the local council. Nevertheless, strong demand remains. Properties are easily let within the area, with many student properties being booked up an entire year in advance.
Short-term loans
Of all Shawbrook’s products, the short-term loan (STL) is in highest demand in areas like Plymouth. They tend to be used for light refurbishment projects, often financing the conversion of single properties to student flatshares or HMOs. The older style properties in the housing stock lend themselves more to HMO products, which is why many investors buy in order to refurbish and hold rather than sell on.
Semi-commercial property
Although we receive some enquiries around converting offices to residential property, there is ever increasing interest in semi-commercial properties. Many holiday towns within the region feature retail premises with flats above. These smaller projects require a small-scale conversion or refurbishment, which lends itself to our STL5, suited to mixed-use properties. There tends to be less demand for commercial property.
Future opportunities
There is development planned across the area with, for example, Penzance in Cornwall earmarked for a regeneration project. It is unclear how such projects will impact the rental market as the project is still in its initial stages, but the area is certainly an up-and-coming destination. Similarly, Newquay is showing signs of bouncing back after a somewhat subdued recovery in the wake of the recession.
