When it comes to selling your home, it is important to know who the most likely buyer is. There is a good chance that the buyer will be someone like you, but this isn’t always the case. The nature of the property market these days means that a wider range of people are looking for homes that they may have previously overlooked.
As an example, if you are looking to sell your first home, it is likely you will think the buyer is going to a first-time buyer. The house is likely to be modest in size and affordable, which are excellent starting points for first-time buyers. However, these features are also likely to appeal to people who are looking to downsize their property.
Downsizers are looking for property
There is a growing number of elderly people who are keen to sell their current home and move into something smaller. A smaller home can be more manageable, it may be in a more convenient location and of course, selling a large home and buying a smaller home will hopefully provide the household with more income. Therefore, there is no denying that vendors need to consider if their home is suitable for elderly buyers, not just first-time buyers.
Of course, it may be that the buyer isn’t looking to buy a home they will personally live in. It may be that the person most likely to buy your home will be a landlord looking to let the property or they could be a property investor, keen to make a strong return on their investment.
Residential property offering more benefits than retail property
A recent study suggests that more than a third of property investors in the UK believe the long-term residential market to be the best option for their needs. This has been a shift away from retail property investment, and this is something that vendors need to be aware of. There could be a range of buyers, all with diverse needs and expectations when it comes to the property they buy, and you are in a position to reach them, as long as you know what they are looking for.
Ken O’Brien is the Head of Client Coverage at EMEA and he released a statement saying; “UK retail valuations have been going through a sustained period of decline since the global financial crisis, and brief rallies haven’t repaired the overall trend, led by the shifting shopping and spending patterns of consumers. Through this period, retail has remained a significant part of portfolios, but if the market trend continues, investors may choose to consider other, more resilient options. Although it may be difficult to exactly replicate the positive attributes that successful retail investments historically provided, the changing real estate landscape does provide other options; whether that be the growth in multi-use developments or the inflation-hedging characteristics of residential assets.”
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Over a third of UK real estate investors (35 per cent) see long-term residential investments as the best alternative to retail property if they move out of the troubled sector in the next year, according to a survey by MSCI Inc.
After long-term residential assets, the survey showed that industrials and mixed-use property are the next most popular replacements to retail in portfolios, with 22 per cent of investors saying they would opt for each of these sectors. A further 11 per cent of investors indicated that they would choose short-term residential as a possible substitute for retail property.
The survey, conducted last month at MSCI-IPF Property Investment Conference in Brighton, highlights how the slide in UK retail property valuations is reshaping attitudes on real estate sector allocations within portfolios. Valuations in retail property have decreased by 16.4 per cent since December 2007 (when accounting for net investment and capex), whilst capital growth across all sectors, on average has been broadly flat at +0.7 per cent over the same period.2 This has been driven by much better performance in other sectors like residential, for example, which enjoyed capital growth of nearly 80 per cent on a like-for-like basis.
According to survey respondents, retail property does offer certain characteristics which are not replicated by other real estate investments. Nearly a third of investors said they would find it most difficult to replace the real rental growth of retail investments and 26 per cent say the availability of long leases would be hard to replicate. A further 21 per cent state the benefits of inflation-tracking returns are a strong advantage of their retail property holdings.
Even within the retail sector, there have been bright spots. Over the same measurement period, Central London Standard Shops more than doubled in value enjoying capital growth of 124 per cent. Supermarkets have also enjoyed positive capital growth but on a much more modest scale with 9.7 per cent growth over the period. Whilst there is no doubt e-commerce is severely affecting certain sections of the retail property market, other sections have, at least until now, avoided such hits to capital values.