26/07/2009
David Alexander, owner of letting agent DJ Alexander, said investors are entering the residential property market because of the rental income available. While some bank
Accounts are paying as little as 0.5 per cent a year, landlords are getting returns of4 per cent, after expenses, in popular rental areas of Edinburgh and Glasgow.
With house prices remaining flat or falling, capital growth, which traditionally motivated clients to invest in residential property, is taking a back seat. Alexander said investors accept that a recovery in capital values, and further growth, will be a medium to long-term process. He added that tenanted properties in locations are attracting the attention of investors who would normally put their substantial cash savings in bank accounts.
Alexander said: “It is the current return from rental income that is attracting clients, rather than the prospect of capital growth, which, during the 27 years my firm has been in business, has been the raison d‘être for residential property investment.”
He said new investors are opting for residential property with an “open mind and a clear head”. They are prepared for the possibility that, three months from now, the market value of their properties may actually be less than they paid.
“They are confident that, unless the world turns completely upside down, values will recover in line with an improving economy. Eventually, the mixture of capital growth and ongoing rental return, will make their investment in stone and mortar pretty hard to beat,” he said.
However, Alexander said his comments should not be taken as a recommendation to start investing in residential property. “I have no idea how much further the market has to fall. A few months ago I took the view that we may see the first, hesitant signs of an upturn later this year but I now fear that this may not occur until some time into 2010.”
SCOTLAND ON SUNDAY, 26 July 2009
A Glasgow townhouse at £1.5 million
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Top ten: Forget about property prices and home in on the rental income
Renting is as good a measure of economic confidence as buying
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Another of our properties is Sunday Times 'Rental of the week'
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High-flying executives push up rental prices for city flats
One of our properties named Sunday Times ‘Rental of the week’
Scotsman property editor gives star treatment to one of our homes for sale
Rise in new-build home sales offers glimmer of hope to battered industry
Capital tips to help you reduce tax expenses
Sunday Herald thanks D J Alexander
Why renting second home is best way to save cash – and face
Sharp fall in corporate residential property rentals as firms suffer
Misery of the 'two-mortgage' trap
Buyers return but Scottish housing market still tight
Like two old-fashioned fairground favourites, the property market continues to be scary
Energy ratings get a green light
BPF calls for a radical shift to rentals
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