UK buyers with pension pots favouring property as an investment, it is claimed

Pensioners in the UK have more investment opportunities than ever before due to pension rule changes and many are looking to property as an alternative to annuities, shares and bonds, it is claimed.

Since pensioners were granted full control of their retirement savings in April, some 70% have opted to drawdown all or part of their retirement wealth and domestic and international property is topping the investment stakes.

Compared to investments in the stock market, property remains a far more predictable and stable option in the longer term according to the latest Global Real Estate Outlook report from property investment company, IP Global.
 
IP Global’s findings show a clear price surge in cities like Berlin, which saw a 10.01%rise, and the central wards of Tokyo, where investors have achieved a 13% return so far this year.

In addition, growing rental demand in cities like Brisbane means that investors can expect a yield of 5.4% per year. Supported by the strong British pound against the Euro and Japanese Yen, UK investors can not only obtain far more favourable purchase prices but also secure a continued income.
 
Domestically, London and most recently, Manchester, are leading the way, according to the report, with prices in Greater London increasing by 12% in the last year. In Manchester, a new property is still valued at less than half the average seen in London, however, prices are expected to rise to close this gap, with new projections putting Manchester price growth at a strong 26.4% up to 2019.
 
With these new found freedoms, there has been a sharp rise in demand from pensioners for experienced and qualified advice on what retirees can do with their savings as they decide how to make use of their pension pot
 
Following the uncovering of a property scam in Spain’s Costa del Sol, where more than 500 investors were defrauded into £21 million of ‘handling fees’ to fake companies, many pensioners remain cautious of overseas property investment.

‘Pensioners have worked long and hard to be secure in their retirement and they need sound, informed advice when making decisions about investing in property. Clarity about investment options and the reasons why they make sense is what advisors need to be sharing with this new pool of investors,’ said Paul Preston, head of UK and Europe at IP Global.

‘From infrastructure developments to rising populations, pensioners have yet to hear the concrete reasons about which markets are seeing economic growth and how this connects to increasing returns from property. For investors, secure and sustainable returns are essential and property remains one of the few investments that can still provide this,’ he explained.

‘Investing at home is an excellent option for a pension pot and the UK market continues to be a safe haven for investors. With the right advice, pensioners can also explore alternative investment locations, giving them greater security against regional market fluctuations and excellent returns. The benefit of this approach speaks for itself,’ he added.