How we maintained an 8.8% ROI on city centre apartments during a global pandemic.
Our Sheffield Fitzgerald development has been a high performing project. We offered it to our family of investors in Aug 2017 with a projected return of 8.5%.
At the time of writing all our apartments are fully occupied (managed by us on our clients’ behalf) and our investors have received on average 8.8%* over the last three years.
How have we done this?
We chose Sheffield because it was an emerging city. Popular northern powerhouse cities, like Manchester and Birmingham, had already seen capital growth – and this was reflected in their less attractive yields.
Getting into Sheffield at the right time gave us and our clients more scope for capital growth in the mid- to long-term. In the short term, yields were better here too.
The price point (from £90,000) was particularly attractive for first-time investors, and we helped numerous clients dip their toe into building a property portfolio with this development.
Seeing the opportunity!
We spotted that there was very little provision in Sheffield for local young professionals and business travellers to the city. It was a gap in the market we wanted to fill. Sheffield is often perceived as a student city (it has a student population of 60,000) and developments are geared towards them.
75% of the apartments at the Fitzgerald are long term lets used by local people and the other 25% are luxury serviced apartments aimed at those visiting or working in the city. (These are performing even better returning almost 15%)
As with the success of any property investment, location was critical
The apartments are equidistant between the city centre and the booming Kelham Island district, with its independent shops, bars, and cafes.
The Steelyard Kelham Photo courtesy of @cog_photo
The business district, law courts, train station, and cultural destinations – like the Crucible Theatre and the O2 academy – are all a short walk from the apartments. There are multiple reasons for people to want to live or stay here.
Whilst serviced apartments geared towards the student market have been severely effected by Covid 19 our occupancy rate shows that for our model the outbreak has caused a short term blip.
It is an important reminder why we only consider long-term prospects, so we are able to withstand short term falls in the market. A stark reminder for anyone doing any sort of investment: spread the risk!
Long-term growth potential!
The proximity of the £175 million West Bar Square development, granted outline planning consent in 2017, was also a major draw for us. In 2019 this became a compulsory purchase order and building work will commence later this year. Our clients are already in position to benefit from this huge investment in the surrounding area.
If you’d like any help starting or developing your property portfolio don’t hesitate to get in contact with us here
*8.8% ROE on average over 3 years using a 75% loan to value buy to let mortgage at 3%.