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Confident Landlords Embrace Opportunities in Challenging Property Sector

New research conducted on behalf of property business expert Handelsbanken reveals that despite the economic uncertainty, large portfolio professional landlords remain optimistic, with the majority planning to acquire new assets in the coming year.

The Handelsbanken Professional Landlords Survey, based on nationwide research among large UK investors with an average of 29 properties worth approximately £14 million each, highlights several key findings:

  1. Six out of 10 landlords intend to expand their portfolios in the year ahead.
  2. Over half of these investors plan to diversify into new sectors.
  3. 92% expect to witness a rebound in property valuations.
  4. London and the South East are identified as the most attractive regions for investment.

The survey showcases the confidence of professional landlords in the long-term value of UK property as an asset class, with 59% expressing their intention to expand their portfolios in the coming year. Only 14% anticipate selling some or all of their properties.

Among those planning to acquire more properties, 57% aim to diversify into new sectors. Offices are the most enticing sector, with 43% of investors keen on taking advantage of the current depressed valuations.

An overwhelming majority of respondents, 92%, anticipate an increase in the value of their portfolios over the next 12 months. 39% predict growth of over 20%, while a mere 8% believe their portfolio values will remain largely unchanged.

James Sproule, UK Chief Economist at Handelsbanken, commented on the positive sentiment expressed towards the commercial property sector in light of the recent stabilization of prices. He acknowledged the impact of the higher interest rate environment, which led to a major correction in commercial property values in the second half of 2022. Retail property prices dropped by 15%, office prices decreased by 15%, and industrial unit prices experienced a 25% decline. Sproule also highlighted the ongoing considerations surrounding post-pandemic working practices and changes in retail habits, factors that continue to affect commercial property valuations.

Geographically, three-fifths of the respondents looking to expand their portfolios plan to invest in new regions. London emerged as the most attractive region for property investment over the next 12 months, chosen by 27% of investors, followed by the South East at 26%. Conversely, Yorkshire and the Humber, as well as the West Midlands, garnered interest from only 9% of respondents, making them less appealing for property investment.

Danielle Coe, Leamington Spa branch manager, emphasized the regional variations in landlord sentiment highlighted by the survey. Coe emphasized the importance of local market knowledge when making investment decisions and stressed the value of having expertise available locally to provide informed advice to property professionals.

The research findings demonstrate that despite the challenges, landlords in the UK are embracing opportunities and maintaining a positive outlook in the property sector.

Read the 2023 Handelsbanken Professional Landlords Survey.