The Best Alternative Property Investments in the UK

It goes without saying that property is one of the most popular types of investments available and when executed well, it can provide investors with a lucrative opportunity to build long-term wealth and security. With that said, many popular property investment strategies that have worked well in the past won’t necessarily work today. In this article, we’ll take a look at a few lucrative alternative property investments that UK investors can’t afford to ignore in today’s volatile property market.

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What are alternative property investments?

As the name suggests, alternative property investments are other methods of investing in property that are outside of the more traditional routes such as buy-to-let. Less common property investments include healthcare facilities, car parking areas, hotels, service stations and office spaces. These methods allow investors to venture into roads less travelled that can yield high returns while diversifying their portfolios in order to mitigate risk.

Why consider alternative property investments?

As highlighted earlier, these types of property investments help investors diversify their approaches and minimize risk. Alternative property investments are particularly encouraged during periods of economic downturn as they can help investors maintain a stable income throughout the year. For example, private healthcare facilities are unlikely to experience a major decline in demand during a recession as their services will always be required. Staycation lets on the other hand are usually very seasonal and are also likely to be less in demand as people cut down on their outgoings.

The best alternative property investments

One of the most popular property investment strategies that are trusted by many investors today is buy-to-let. This technique involves purchasing a property, typically with buy-to-let mortgage, and letting it out to tenants for a return. With mortgage interests rise on the rise and changes to legislation and tax over the last few years, this method is increasingly becoming less appealing.

So, what are the best alternatives?

Parking spaces

Parking spaces are increasingly gaining popularity amongst investors. They can be a good vehicle for consistent income and with average yields of about 8%, they make a great alternative property investment. Not to mention prices for car parking spaces average at around £25,000, a fraction of the cost of purchasing a property. According to major motor organisations, the number of vehicles on British roads predicted to increase by 39 million by 2030. Consequently, the demand for car parking spaces is predicted to soar.

Office spaces

Investing in office space is another fantastic way to diversify your portfolio and spread risk. Office space typically offers consistent, long-term returns. In many instances, office spaces can actually offer greater returns than residential rental property in the long run. With many workplaces returning to shared offices, it’s no wonder more investors are turning to this alternative property investment.

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Property crowdfunding

Property crowdfunding is the practice of funding a property project by raising money from a large group of people who each contribute a small amount. The funds raised can be used to finance a new property development or buy an existing property. This typically means less upfront investment for investors but potential for a good return, thereby minimising risk.

Joint venture investments

Joint venture investments allow investors to partner with other property experts for the purpose of investing in a particular property project. This could be for acquiring a new property. Typically, property investors will invest the funds required to facilitate the deal while the other party will source and manage the deal through and through. This makes for an asset that is relatively low maintenance but has the potential for attractive returns depending on the project that is being undertaken.

Property investment trusts

Property investment trusts also referred to as REITs are companies that own operate, or finance income-generating property. REITs will usually fund investments using capital from different investors. This allows investors to diversify their portfolios and earn income from property without necessarily having to source, buy, manage or finance the deals themselves. Types of property REITs typically invest in include warehouses, hotels, self-storage, shopping centres and office spaces. As many REITs are publicly traded, investors can usually buy and buy them like stocks.

Social housing

With the UK facing house shortages of 4 million, the government, local councils and housing associations are under enormous pressure to provide more affordable residential homes. Social housing investment provides investors with the opportunity to be part of the solution while also gaining an attractive return. With various government-backed schemes and opportunities available, there is a vast opportunity for investors to benefit from this unsaturated alternative property investment opportunity. While the criteria will vary with each council, it’s overall a great opportunity for UK-based investors to explore.