Industry Updates

Alternative property market offers attractive prospects in 2012, says Kames Capital

Thursday, December 08, 2011

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Phil Clark The alternative property sectors could offer some attractive opportunities in 2012, according to Phil Clark, head of property investment at Kames Capital.

Clark, who heads the property fund management team at Kames Capital, says alternative property sectors such as student accommodation could offer some appealing opportunities in what will be a challenging 2012.

My view is that 2012 will be every bit as challenging as 2011, however there are still many good opportunities for property investors to make well informed decisions."

"In particular I believe investors should consider a greater exposure to alternative sectors such as residential property, student accommodation or healthcare property. One of the key attractions of these alternative sectors is they generally have a high income yield, an ability to track inflation and have low vacancy rates.

Clark says investors should look at the fundamental drivers which make them attractive compared to some commercial properties.

"Investors need to give greater credence to the opportunities and investment attractions - such as basic demand - which make the alternative property sectors stand out from other commercial property investments."

In terms of residential property, Clark says the south-east is going through a major structural shift from a high ownership model to a need for greater rental accommodation, which is driven by the lack of mortgage finance. "This is creating rental increases in the order of 7% per annum in some locations, coupled with a lack of supply to meet demand," he says.

Meanwhile, despite recent protests over increased tuition fees and a fall in the number of university places available, Clark says opportunities still abound in student property. "Student accommodation demand for the best universities is leading to typical annual vacancy rates of less than 2 per cent," he says.

Finally Clark points to the percentage of the UK population becoming elderly and needing specialist nursing care which is being factored into the demographic profile.

"Despite this increase in numbers there are not enough quality nursing homes to accommodate this demand making this an attractive sector to invest in."

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