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Investors plan to stay away from Wales

estate agents on a high street

Landlords see Wales as the least attractive area to invest in over the next 12 months, with just 11.5% viewing it as appealing, research from Handelsbanken has found.

House prices fell by 6.5% in Wales in the year to March 2024, according to a study by Principality Building Society, which might explain why investors are cautious about the Welsh market.

Other areas seen as largely unattractive are Yorkshire & the Humber (12.5%) and the South West (12.5%).

East of England a growth area

At the other end of the spectrum landlords are most positive about the East of England, which 26.5% saw as an attractive region.

Andy McCabe, district head, East of England said: “As well as other advantages and opportunities, parts of the East of England region are particularly attractive from a yield perspective, all of which is helping this part of the country to have one of the fastest growing populations and economies in the UK.”

This was followed by North East & Cumbria (24.5%), North West (22%) and South East (21.5%).

Investors were able to mark multiple regions as appealing.

Portfolio landlords

While there’s been reports of landlords leaving the sector, landlords with an average of 35 properties each seem keener to stick it out.

Nearly two thirds (62.5%) plan to grow their portfolio in the year ahead. Over a quarter (27.5%) will maintain their portfolio’s current size, and just 8.5% aim to exit the market completely.

The majority (70.5%) of those looking to buy more properties want to diversify their portfolios geographically.

James Sproule, UK chief economist at Handelsbanken, said: “While headlines over the coming months are likely to be dominated by the general election, interest rate cuts and the ongoing cost of living crisis, these factors don’t seem to be jeopardising investors’ upbeat mindset.

“The adjustments to capital valuations, often masked by inflation, as well as increases to rents, have resulted in property once again delivering a premium over gilt yields – and opened up the potential for attractive opportunities as the economic recovery progresses.”

Commercial property on the up

Some 82% of investors expect demand for commercial property to increase over the next 12 months, marginally ahead of residential property (77%) – possibly driven by consistent numbers of workers returning to offices.

On a sectoral level, the three most in-demand sectors among property investors over the next 12 months are residential flats (63%), commercial offices (62%) – be that for repurposing or to capitalise on top quality assets in prime locations – and residential houses (61.5%).

Support for these sectors has risen dramatically over the last year, with flats up 10% (53%), commercial offices up 4% (58%) and residential housing up 15.5% (46%) compared with 2023.

At the other end of the spectrum, the three lowest scoring sectors this year are commercial retail (50.5%), student housing (49.5%) and residential park homes (32%).