The last five years have witnessed dramatic changes to the property investment landscape. Since 2015, we’ve seen landlords pay more tax, take on greater regulation, incur significantly increased costs and endure the threat of rent freezes. You could be forgiven for thinking that creating wealth through property as a strategy had had its day.
But Warren Buffett taught us to be fearful when others are greedy and greedy when others are fearful. So as 2022 slides into Autumn and the market looks fearful, what prospects exist for investors looking to make an impact in today’s property market? What are the key investment strategies that are going to make a difference?
Two people who are well-placed to have a view on this are Ritchie Clapson and Simon Zutshi. Ritchie is the co-founder of leading property development training company, propertyCEO, and is a regular Property Investor News columnist. With 40 years of development experience, he’s got a keen eye on the opportunities in all aspects of the development arena. Simon Zutshi is the founder of property investors network (pin.) He is also the founder of the specialist property development lender, CrowdProperty. So, what do these two property luminaries think will be the next big thing in property development and investment? And what are the best entry points for those looking to get into property in 2023 and beyond?
I think the first thing to say is that, as an asset class, property still makes a lot of financial sense, whether you’re developing it or holding it. The first question any self-respecting entrepreneur or investor should ask is, ‘is there a market for the end product?’. Given there’s currently a massive undersupply of housing in this country, plus they’re not making any more land, you’ve got to think that of all the asset classes, property has a massive advantage. It doesn’t mean you can build anything anywhere and guarantee a profit, but at least you know there will be a healthy underlying demand. Plus, the government is actively supporting property development, showing the importance of new housing in their thinking. And, of course, unlike other less tangible assets, property can’t lose all of its intrinsic value overnight.
So, where will the smart property money be made going forward? For me, property development has a lot going for it right now, and this looks set to continue for the foreseeable future. One of the interesting phenomena we’ve witnessed over the last few years has been the creation of a new stratum of property development that sits above refurbs and flips but below the scale of projects required by the larger developers. We’re talking about schemes of between 5 and 20 units; too large for jobbing builders to take on for their own benefit but not profitable enough for the bigger players. But with typical profits ranging between £100k and £500k, these ‘small-scale’ projects are understandably highly attractive for individual investors, producing many times more profit than the £40k or so produced by your average flip.