The investment case for Hayling Island

The investment case for Hayling Island

From the beautiful beaches of Hayling Island, we are delighted to offer this modern property, which comprises an entire block of 14 flats and is just a stone’s throw from the beach itself.

Hayling Island is in Hampshire, connected to mainland by a short road, and is situated between Chichester and Portsmouth. Being just off the South-Eastern Coast of England, it’s part of a region that Savills predict to be the highest growing over the next five years.

The building was acquired at a 13% discount to its RICS break-up value, a 3% discount to its RICS investment value (bulk transaction price), and is 50% geared for enhanced returns. With an impressive dividend yield of over 3.8%, and strong growth predictions for the area, the investment case is convincing. The case is underpinned by three main factors:

    • The investment comprises all 14 flats in this property and is geared at 50% loan-to-value (LTV) of the purchase price. Gearing gives enhanced exposure to property price movements, and the potential for amplified returns; though investors must note amplified negative returns if prices fall. If you’d like to find out more about the effects of gearing, click here for our blog post on geared properties.


    • There is a significant discount reflected in the purchase of this block, which we secured directly from the vendor for £1,650,000 – versus the RICS break-up value of £1,890,000, and RICS investment value of £1,700,000 (which reflects a bulk sale discount). Even using the lower valuation of £1,700,000 for prudence, investors benefit from an initial 3.0% of capital growth, which is amplified to 5.6% due to the effects of gearing.


    • The property is on Hayling Island, in the South-East of England. Savills, in their forecasts for house price growth by region, have this as the region of the country they expect to appreciate most in value over the next five years – a predicted 21.6% (2016: 7%, 2017: 4%, 2018: 4%, 2019: 3%, 2020: 2%).


A wholesale discount

Our investment comprises all 14 flats in the block, and the freehold interest of the building. We have achieved this off-market sale through our specialist networks directly from the vendor. By purchasing the entire building in a single transaction, we were able to offer them certainty of sale to an experienced operator as an alternative to the much longer process of selling the individual units on the open market.

We’re paying £1,650,000 for the entire block versus the RICS certified market valuation of £1,700,000. This valuation estimate is for the block, sold in a single transaction. The surveyor also states an aggregate Vacant Possession valuation of £1,890,000. This higher valuation represents the ‘break-up’ value of the block.

As appropriate, we have calculated a purchase discount of 3% using the lower of these two valuations, at £1,700,000. Owing to the effects of gearing, investors will see capital gain of 5.6% if the property valuation remains unchanged over the next 3 months, at which point a valuation update is given by an RICS Chartered Surveyor. You can read more about our revaluation process in the “‘Resale’ opportunities” section of this page.

The South-East of England is expected to see strong capital growth

With the support of extensive industry research, combined with the knowledge of our experienced property team, we believe investments in this region to be an attractive opportunity – and a chance to diversify.

The well-regarded research team at Savills have the South-East as the region they expect to be the highest-performing between 2016-2020 with a 5 year capital growth forecast of 21.6% (2016: 7%, 2017: 4%, 2018: 4%, 2019: 3% , 2020: 2%).

A highly attractive location

Our property is located close to Portsmouth and Chichester making it a popular retirement location and providing for a very stable rental profile. This building has seen a 100% occupancy rate in recent periods, although we’re assuming a void rate of 3.8% in our forecasts for prudence.

Hayling Island also happens to be a very popular holiday destination for families in the UK. It has a range of beautiful beaches, watersport activities, funfair rides and a rich history, making it an attractive place to live, as well as to holiday. Our property is just a stone’s throw away from the beach – a rare luxury that only adds to the attraction of this investment opportunity.