A survey carried out by Savills Research with www.Holiday-Rentals.co.uk has shown a price and rental premium for properties located near airports served by low cost airlines.
This was one of the key findings of the survey which questioned over 12,000 owners of overseas property who use Holiday-Rentals.co.uk to advertise their properties.
Analysis of the sample of properties included in the survey showed that the average price of a property located within 10 miles of an airport served by a low cost airline is 39% higher than for similar properties within the same distance to an airport without a low cost airline carrier. The research showed that the impact of low cost airlines on property prices reduced as the distance from an airport increased - there was only a 2% difference in the average price of properties situated over 80 miles from an airport.
The survey revealed that properties served by low cost airlines had higher average rents than those without low cost airlines. The difference in average rent was as much as 30% for properties within 10-20 miles of airports.
Jacqui Daly, Savills Research comments. “The potential to charge higher weekly rents is enhanced by low cost airlines – because the travel costs are lower holiday makers are therefore willing to pay higher weekly rents for a holiday property. This is clearly important to investors as these properties are higher yielding assets.”
The rental potential of holiday properties was one of the most important factors owners considered when buying foreign property, which highlights the fact that many are looking to rental income to help cover the costs of the investment.
Ross McGowan, sales director, www.Holiday-Rentals.co.uk comments. “Marketing a holiday property on the Internet is the most efficient way to reach a large number of potential renters. It also eliminates the need to employ a property management company that will take up to 30 per cent or more of profits through commission, charges and fees.”
In terms of the factors influencing price growth, well over half of respondents recognised that new emerging holiday destinations, characterised by a growing number of flights and low cost airlines, offered the greatest opportunity for price growth.
Daly again, “Interestingly the established medium distance destinations
such as Cyprus and the Canary Islands, where the flight time is about 4 hours,
reflect the greatest premium in terms of capital value because of the availability
of low cost flights.”
Another UK web-site launched a new service this week tailored to the needs of
the individual overseas property investor. Invest2Gain.co.uk aims to ensure
that potential investors make the most informed choices on where to put their
money to get the best return – by providing professional and unbiased
financial analysis of investment opportunities overseas
Managing Director Terry Pentland explains: “Based on personal experience, many of the expensive brochures issued by developers (and there are a lot of them) paint a very rosy picture and this is not surprising. However, a more detailed analysis can strip the gloss from some of these ‘opportunities.’
"Investments that look attractive at the outset, can produce some very nasty surprises further down the line!
"We aim to give potential investors all the facts and figures that they need on developments in a number of countries – some of which we may have sourced – or alternatively, those that our clients may be considering.
"We provide a level of detail not only on the entry costs, but more importantly, the EXIT costs. Unless an investor is able to assess the whole picture in detail, their hopes of an early retirement may be dashed!!
"For example in one case that we looked at recently in the Canaries, the developer’s agent was claiming a 112% return on your investment within three years. However, after we calculated all the costs and taxes, the projected return on investment was only 32%.
"We are keen to work in partnership with appropriate developers however. We know that we can attract serious investors where we can demonstrate a robust financial case on the developer’s behalf. This helps them to stand out in the sea of potential investments that exists.
"We can clearly identify the element of financial risk involved, which is a potential benefit to financial advisors and their clients.”
Invest2Gain is targeting those primarily interested in overseas property as an investment.
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