@sourceinvestments
How we achieved an 8.1% ROI on city centre apartments.
One of our core values is sustainable wealth creation, or in other words, balancing yields and capital growth.
A prime example of this is the Brickworks development in Cardiff.
All apartments purchased through Source are currently occupied with yields up to 8.1%.
Read how we achieved this in the case study below.
Runway for growth
Areas with advanced infrastructure, social amenities and a well established rental market will of course, provide an ROI. However, where investors find real value, is areas with runway for growth.
What we mean by this, is somewhere with potential (and often plans for) considerable investment or regeneration. This allows investors to capitalise on lower purchase costs, with rental prices and property values then surging when the area becomes more convenient and desirable.
When we initially looked at Brickworks, the surrounding area was entirely industrial. However, the city centre was emerging as an urban capital – with a redbrick University, a thriving social culture and huge regeneration projects on the cards. In particular the £900 million Central Quay redevelopment, located just two minutes away, included offices, hotels, restaurants, retail units, a multi-storey car park and more.
The completion of the development, surge in housing demand and the above regeneration, is reflected in today’s increased rental values.
Tenant Opportunity
Cardiff is set to see population growth exceeding other major UK cities such as London, Manchester and Liverpool by 2034. With this, comes an increased demand for housing, employment and education.
Despite the population projections and the emergence of the city centre, there was little living provision for young professionals. A large proportion of urban and suburban areas are populated with students, with housing opportunities marketed towards them.
Brickworks offered one, two and three bedroom industrial style apartments with balconies/terraces, a high quality finish and a communal rooftop – very much tailored to the emerging young professional population.
Timing
Going hand-in-hand with the above, timing was a huge contributor to the success of this project. We had recognised the potential of the area before regeneration plans had come into fruition, allowing investors to capitalise on a lower point of entry and good prospects for future yields.
Furthermore, our relationship with the developers allowed us to secure great off-plan units – with properties valued in line with the area pre-regeneration.
In it for the long run
As with all of our investments, we advised investors to hold for a minimum of 5 years, to allow the investment to mature and generate the best returns possible.
However, with increasing demand on the rental market across the UK and future house price predictions, the prospects of this investment for those in the position to hold on over an even longer period, are even more promising.