‘Long run occupancy on serviced apartments is 5.8 percentage points higher than hotels but with almost double the operating profit margin, serviced apartments clearly offer an attractive alternative to hotels’ claims The 2012 Savills UK serviced apartment report.
Commercial Property Investments have traditionally been out of reach of every day property investors due to the higher purchase prices. Being a hotel owner would require a vast some of capital and investors could only have a stake by investing in a commercial property fund.
In recent months there has been a flurry of Hotel Investments advertised on the property portals such as Landlords Today and Property Overseas Today. Hotel room investment property is accessible to everyone because it has a low entry cost - from as little as £ 15,000 - for the purchase of a hotel room.
‘Hotel Room Investments are very popular with non-resident investors and first time property investor because the offer hands off investment with incredible returns; yields as high as 10% are being achieved by our investors’ says Graham Flaherty of One Touch Property Investment.
In March 2012, the Hurst House Hotel https://www.propertymarket-investment.co.uk/hurst-hotel-investment-UK-boutique-hotel-investments.htmlwas made available for investment with 10% Net returns for 15 years and a 150% buyback guaranteed - which understandably created a significant amount of interest.
Commercial properties such as hotel room investments and serviced apartments typically have long commercial leases with the operator and can therefore be included in a Self-Invested Pension Plan. There are tax saving benefits of investing in a SIPP whereby one can claim back between 20 percent and 40 percent of the purchase price for tax paid on the amount invested. There only drawbacks are that there is no personal usage and income can only be withdrawn at 3 percent of the total SIPP value until retirement age.
Some landlords still prefer owning an apartment rather than a hotel room investment because they feel that there is a stronger exit strategy. They have opened up their minds to investing in serviced apartments because the rental rates are nearly four times higher than the rents achieved on buy-to-let property in the private rented sector.
Recent property releases, such as The Richmond Luxury Living serviced apartments in Liverpool https://www.propertymarket-investment.co.uk/high-yeild-property-sale-liverpoolL3-buy-to-let.htm?utm_source=angelsmedia&utm_medium=article&utm_campaign=richmond, offer high yield income generating Net returns of between 15.5% and 25% per annum. The luxury services apartments in City Centre Liverpool are being snapped up by cash investors seeking solid rental returns.
The general manager, Steven Hesketh, joins Richmond Luxury Living directly from delivering 84% occupancy in 2011at Bridgestreet LiverpoolOne serviced apartments. Investors feel their fully-managed property invest is in safe hands!
There is a relative shortage of serviced apartments in Liverpool, compared with hotels rooms: in 2010 there were only 207 serviced apartments in Liverpool City Centre, out of the total of 4470 rooms, available according to the June 2011 Liverpool Hotel Fact File. The average serviced apartment’s occupancy level of 76% was higher than the Four Star Hotels in Liverpool with 73.5% and Budget Hotels at 74.5%.
Boosted by the Capital of Culture Award 2008 and significant investment over the past 10 years in Liverpool it is already by viewed by overseas visitors as a destination of great sporting and musical significance. Government spending of £ 9million on the development of Pier Head port, which has just been opened to International cruise liners, will further enhance tourism number and occupancy rates in Liverpool.
Graham Flaherty Profile
I am an investment analyst at One Touch Property Investment. In my role I am to find high yielding property investments across the world; well researched property developments, hotel room investments as well as serviced apartments in the growth areas of business districts.
I source fully-managed investments such as U.K Student accommodation https://www.propertymarket-investment.co.uk/student-accommodation-investment/student-pod-investment.html, delivering good income of 10% net yields.
Those U.K residents seeking safe retirement income should take a look at our SIPP compliant investments such as care homes, self-storage investments and fractional ownership commercial property to include as part of a balanced self-invested pension plan.
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