Over recent years, the niche of holiday lets has been attracting increasing attention as more and more travellers opt for a “home-from-home” experience in preference to using hotels. While many areas have some form of tourist season at certain times of the year, others are popular all year round and hence make the best choices for investors who are interested specifically in that niche.
Most of the prime holiday hotspots in Europe, but the very best returns are in the U.S.
Holiday home insurance company Schofields researched holiday home markets and calculated their potential return on investment taking into account not only the cost of property in the area and the potential rental income to be made from it, but also indicators as to its long term popularity. Top place was taken by Kissimmee in Florida, with an ROI of 26.02%.
Another Florida location, Miami, also took a mention, but had a much lower ROI of 6.82%. Europe had a total of 8 locations with Italy and Portugal claiming one each (Lake Garda and Faro), France and Spain claiming two each (Nice, Avignon, Barcelona and Marbella) and England also claiming two (Cornwall and the Lake District). In Europe, the top performers were Barcelona (18.78%) and Cornwall (12.01%) with the Lake District actually coming in last with 2.89%.
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The sun smiles on property investors
While the name Kissimmee may not be well known in the UK, it is known in the U.S. for the fact that it has glorious weather all year round, plus access to the attractions of the city, beautiful countryside and theme parks, including, of course, Disney World, Florida. The theme of good weather continues down the list and it is noticeable that the lowest returns are in the Lake District, which has a relatively short period of fine weather.
Cornwall, which is much further south, gets a lot more sunshine and also much higher returns. It’s also worth noticing that all of these destinations have the attractions of the city or nature and the top ranking ones tend to have both. Cornwall is a slight exception here, but it has the massive draw of the Arthurian legends, Daphne Du Maurier and, of course, the Harry Potter connection.
Investors can look for ways to increase the value of their investments
Looking into ways to encourage capital appreciation and/or to extend the period of time for which a property can be let are both ways to get more money from an investment. Investors who are prepared to look beyond the holiday rental market may find that they can dovetail holiday lets with other forms of letting. For example, a property could be rented out to students for most of the year, but to holidaymakers in the summer.
This might involve being prepared to give the property something of a short-term facelift, but this effort could be very worthwhile, since many university towns are also very popular tourist destinations, especially in summer when the weather is at its best.
Hopwood House are property investment specialists, with a wide range of investment opportunities overseas and in the UK in the student property, hotel room and buy-to-let investment markets.