Wednesday, 2 July 2014

Studio Flats - Are They Worth Investing In...?

Earlier this year a landlord client of mine sold his studio flat in Broadfield, Crawley, that he purchased in 2009.  After five years the capital growth had not been outstanding, only 4% to be precise.  If he had purchased the flat when it was previously sold in 2003 the capital growth would have been a much more impressive 50%.  But what struck me was the yield, based on the 2009 purchase price the yield was a phenomenal 8%.
Studio apartments tend to be the first rung on the property ladder for tenants or a temporary place to stay for visiting workers and experience a higher turnover of tenants than the larger properties.  But with a constant stream of workers coming to Crawley to work at Gatwick Airport the studios are always in demand and this has continuously pushed up the monthly rent.  Amazingly, at the price the flat was sold at the yield is still just under 8% (7.93% if you want the exact figure).

So are studio flats worth investing in?  If the right location & the right price can achieve an 8% yield – yes they are.

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