Luxury living: an untapped property investment niche

Jake Webster, Managing Director, discusses the leisure property market, specifically looking at how factors such as the COVID-19 pandemic had an impact on UK holiday habits. With the rise in UK based ‘staycations’ in recent years, the leisure market has presented new opportunities for asset managers looking to expand their portfolio.

One specialist sub-sector of the holiday home and leisure market remains highly attractive to asset managers, explains Jake Webster, Managing Director

The COVID-19 pandemic fuelled the UK’s ‘staycation’ boom in 2021, as lockdown restrictions began to ease at home, increasing both occupancy rates and rental income on holiday lets.

But the trend didn’t end with the ban on foreign travel. It’s maintained its popularity ever since, with millions of families choosing to holiday closer to home.

Last year, more than six in 10 Brits planned a ‘staycation’, up 50% on 2022 figures, boosting local economies in tourism hotspots

This growth in demand from UK holidaymakers hasn’t escaped the attention of property investment clients seeking out higher returns. With landlord profits squeezed by tax changes, new lending rules and higher interest rates, short-term and holiday lets have increased in popularity due to their greater potential returns.

Below are three key features of holiday let property investment

  1. 1. Rising rental income
  2. 2. Strong demand

    Demand for holiday letting remains extremely high, with Easter 2024 seeing record bookings, 11% annually and the busiest ever for holiday let owners.

    There was an 8% increase in bookings year-on-year in 2023, said Sykes, which totalled a 71% rise on pre-pandemic levels.

  3. 3. Tech development

    The growth of digital platforms, such as Airbnb, Booking.com and Expedia, have made it much easier for holiday let landlords to advertise their properties as well as manage bookings and take payment.

    According to the Office for National Statistics there were nearly 2.8 million stays in short-term lets booked through these three platforms alone in the UK from July to September 2023.

The luxury living opportunity

At the Seventy Ninth Group, we see the potential for clients where others may not, which is why entering the holiday let market felt right.

We saw the variety it would bring to our portfolio, as well as prospects for clients.

Specifically, luxury living real estate encompasses high-quality homes and lodges in the most desirable holiday park locations, set on modern sites with five-star facilities.

This is a specialist property niche and requires knowledge of the nuances and complexities of the sector to really maximise its potential.

We offer clients access to our assets in this untapped sector, without the hands-on management and maintenance of directly investing in a holiday let property.

Holiday parks and campsites generated £12.2bn in visitor expenditure last year – equivalent to £7.2bn GVA and 226,745 FTE jobs. That’s according to the UK Caravan and Camping Alliance, which said that the UK holiday park and campsite sector accounted for over 5% of the tourism sector’s GDP, with visitors spending an average of £217 a day to rent accommodation.

Not only did the pandemic boost the popularity of the staycation, it led to a changing demographic, with the rise of the so-called ‘posh campers’.

According to research from Mintel, the COVID-19 pandemic brought an influx of affluent families into camping and caravanning. Almost four in 10 (37%) have a household income above £50,000, compared with just 21% pre-pandemic. It also found ‘significant pent-up demand for posh camping’, as almost four in 10 (39%) campers and caravanners said they would pay extra to stay in a luxury caravan or lodge.

This is also a fundamentally fragmented market, according to the latest analysis from Savills, making it a sector ripe for consolidation and attractive to private investors seeing to buy, build and reposition holiday parks.

Bespoke approach

Our agile approach at the Seventy Ninth Group allows us to acquire assets from different sectors, enabling us to expand our portfolio and develop the leisure sector of the business.

It also means we can adjust our strategy on each project to meet the individual requirements of the location, infrastructure and demand.

We focus on desirable holiday locations and buy distressed or undervalued assets before working to achieve the best return, by adding value and/or developing revenue streams.

That might require refurbishment or full development of an existing site before selling, leasing the site or managing it directly. There’s no one-size-fits-all approach in this sector because there are so many variables to consider.

Extensive market analysis, combined with our experience, means that the Seventy Ninth Group can spot buying opportunities early and take action, helping clients to invest in this untapped and growing sector.

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