Second Estates has launched a new fund giving investors exposure to the U.K. holiday lettings market.
The fund provides sophisticated investors, high-net-worth individuals and institutional investors with access to an alternative real estate asset class, offering a share in any rental income and increase in property values over time. The fund is exclusively for sophisticated investors, HNWIs and funds with a minimum investment amount of £10,000 ($14,000).
The launch of the fund follows Second Estates successfully securing its first tranche of investment, which will be deployed into U.K. holiday let properties in the run up to the busy summer season. The fund is open for further commitments and has a target of up to £100 million ($142 million) in assets.
The U.K. holiday letting market is a high-yielding alternative property class. Holiday let properties can produce yields of more than 12 percent, significantly above traditional buy to let and student properties.
Tourism has boomed in the United Kingdom in recent years, with a weaker pound attracting an increasing number of overseas visitors and encouraging more British holidaymakers to take staycations, according to Second Estates. Tourists in the United Kingdom are increasingly likely to stay in holiday lettings and the sector has a higher proportion of ABC1 customers than hotels and B&Bs. The holiday lettings market is forecast to grow at a steady pace of 4.4 percent year-on-year between 2012 and 2022. In 2012, it was valued at £2.3 billion ($3.3 billion) and is projected to reach £3.5 billion ($5 billion) by 2022. This provides a healthy macroeconomic background for investment with rental incomes increasing year-on-year above the rate of inflation.
“We’re proud to be the first movers in this market, opening up an alternative property asset class to sophisticated investors,” said Alistair Malins, CEO and founder of Second Estates. “The U.K. holiday lettings sector is booming whilst other property sectors are in the doldrums, making it a sensible choice for investors. Our fund targets top-performing properties in some of the United Kingdom’s most successful holiday destinations, providing a strong underlying investment thesis.”
Clive Sykes, investor in Second Estates, added, “Whilst other areas in the U.K. property market have stalled recently, the holiday lettings sector has gone from strength to strength. The robustness of this market has made it a popular target for investment and Second Estates provides a cost-effective and hassle-free way of gaining exposure to this fast-growing asset class.”
