Miles Kevin, head of Knight Frank’s residential development team in the South West, says that, although the above figure could be slightly skewed by the fact that people held off booking their holidays until later in the year in 2010 because of uncertainty over jobs, existing investors should be optimistic:
“The number of letting weeks has increased significantly in recent years. Five or six years ago, it typically was around 25 weeks but now it runs for around 32 weeks, driven in part by people opting to take long weekends earlier and later in the year – in the softer climate of Devon and Cornwall, this can be as late as November. The signs suggest that the “staycation” zeitgeist will continue and that holiday properties will remain in demand as the economy improves.”
This increase in holidaymaker demand is being matched somewhat by a rise in the number of people considering a second home as a stable, long-term investment – many holiday home buyers are approaching retirement age and looking for a wise use of equity released from selling the large family property; some relocate to the area and live in their property while they search for a new primary residence.
There has also been a rise in the number of buyers that see a second home as a mixture of business and pleasure, who want to use the property themselves for leisure as well as to rent it out.
Miles Kevin: “Current yields for new-build properties in prime (coastal, or historic town) pockets of the South West are healthier than ever – we are seeing some of the schemes we’re selling achieve up to 8%. For example, a two-bedroom flat with a modern interior in Newquay, Cornwall can command £1,000 or more a week during July and August.
However a less-modernised property might only command £650: the holiday letting market looks for quality and will not put up with Granny’s furniture’ any more, so a new-build, well-furnished property often better fits the bill”.
Knight Frank anticipates that new-build second home stock will be scarce for the next two years, but says that development activity has already begun to pick up, with developers centring on areas including Watergate Bay in Newquay, Polzeath, Looe and Portreath in Cornwall and Woolacombe Bay, Torquay and Sidmouth and Devon.
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