Over the last year or two some reports have suggested the city living apartment market could be back on track - with brisk demand from tenants, tighter supply and rising prices and rents. For the first time in years new schemes are back on the cards. So in this two-part report we will look at the current state of and prospects for investing in the city living apartment market - starting this month with key north/Midlands cities and moving on to London in the next issue.
First of all, let's retrace our steps and look at the recent history of this market. City living apartments were undoubtedly one of the big investment propositions of the late 90s and early 2000s. New 'designer' apartment blocks shot up like mushrooms as previously not-so-desirable inner city plots became the coolest address in town. Many investors bought into the city living dream of smart lifestyle apartments offering temptingly high yields and often with guaranteed rent included in the deal.
Then came the recession. Just as supply was peaking, demand from tenants fell away leading to claims of oversupply. Many new city living schemes were cancelled. Some investors were left with swanky new apartments that were difficult to let and almost impossible to sell, except at a loss - it isn't uncommon to find cases of regional city centre property values declining by 30-40% during 2008-11.
Next, what might be the pros and cons of investing in city living? New build properties can often be bought at very attractive prices, especially off plan, suggesting very attractive yields and potential for capital appreciation. Brand new properties in swish new schemes tend to let very readily, sometimes at a premium. As city living is now a popular mainstream lifestyle choice there is often healthy demand, particularly from professionals on above average incomes and students. These kinds of investments also promise a genuine hands off' investment as professional management is often available on site.