Is real estate the best asset class for 2022?

According to a recent survey, approximately one-third of UK adults agree that property will be the best performing asset in 2022, with investors favouring it over stocks, cash and cryptocurrency.

Property investment continues to play a huge role in sustaining the economy of the United Kingdom. Citizens of the UK are the most likely in the world to invest in bricks and mortar, despite the recent raising of the base interest rate.

What asset class is real estate?

When it comes to investing, there are five main asset classes. These can be broken down as follows:

  • Alternative assets: physical, tangible assets - this is the real estate asset class.
  • Stocks: shares or equities issued by companies.
  • Fixed income investments: a more complex way to describe debt - things like government bonds can be considered fixed-income investments.
  • Cash (and equivalents): Physical money or savings kept in a bank.
  • Futures: A financial derivative where parties agree to exchange an asset at a predetermined price in the future.

Alternative assets (also known as real assets) are physical items with an intrinsic worth on account of their properties and substance. Aside from real estate, some other examples of alternative assets include precious metals (like gold and silver), natural resources (oil and gas), equipment and commodities.

Asset classes UK: why do people invest in the real estate asset class?

Investing in UK property is seen as relatively low-risk in comparison to investing in other asset classes like stocks and shares. During the coronavirus pandemic, for example, share prices dropped across almost every industry, while property prices remained comparatively stable.

That’s not to say there aren’t risks involved with investing in UK property - however, many investors feel that the risks are somewhat mitigated by the high demand for housing and predictable house price fluctuations. In addition to this, the real estate asset class provides investors with an opportunity to diversify their portfolio, on account of house prices often moving in the opposite direction of financial assets like stocks, shares and bonds.

Real assets are generally more stable than financial assets, although they offer less liquidity. This means that while you’re more likely to make a steady profit from property, you won’t be able to free up the funds locked into your investment as quickly as you might do with shares or other financial instruments.

Are real estate investment trusts considered alternative assets?

Real estate investment trusts pool the finances of several investors to purchase property. These trusts generate a steady stream of income for their investors, although they don’t offer much in terms of capital appreciation. Instead, real estate investment trusts offer high liquidity (like stocks). While they deal with tangible assets, REITs aren’t strictly considered as an alternative asset class.

Is real estate the best asset class?

No two investors are the same, and personal preference will ultimately play a role in whether you consider real estate as the best asset class - but there’s a reason why almost all successful investors diversify their portfolios with various types of property. Here are just a handful of reasons why real estate can be considered the best way to invest in 2022:

Buy-to-let properties generate steady income all year round

Buy-to-let investment is a great idea if you’re investing for the long haul and not simply out to make a quick return. Instead, when you become a buy-to-let landlord you can expect to enjoy a regular monthly income from rent. Savvy investors often use rental income to fund further property acquisition, thereby growing their property portfolio over the years.

However, before investing in a buy-to-let property, it is important to ascertain whether the project will be profitable. Apply the 5% rule to any potential purchase, and be certain to use the PropertyData free rental yield calculator to estimate whether an investment is likely to provide a healthy return.

Real estate appreciates in value over time

In the United Kingdom, the consensus expert forecast is for around 3% growth per year over the next five years. When you compare these sorts of gains to the small figures achieved by simply allowing your money to stagnate in the bank, there’s no real comparison. Real estate is the way forward for smart investors - but making the right investment is key to enjoying healthy returns.

You can get started with property investment without huge upfront sums of cash

Real estate doesn’t have to tie up lots of cash. By putting just 20% down on a buy-to-let property, you can utilise a mortgage to leverage your asset and continue to grow your investment.

What is the safest real estate asset class?

There are two main types of real estate asset classes:

  • Residential: domestic properties where people live, such as houses, flats and apartments.
  • Commercial: properties from which business is conducted, such as offices and retail space.

While both can be considered safe investments, the changing face of the high street coupled with an increased demand for housing means that residential property is the best real estate asset class in 2022. In fact, if you look at most high streets in the UK, you’ll notice commercial buildings being converted to residential - with not much traffic going in the opposite direction.

The main takeaway is that demand for housing, and rental housing, in particular, has never been higher in the UK. In addition to this, many areas in the North of the country are undergoing regeneration which has the knock-on effect of attracting skilled individuals away from the traditional commercial hubs of Central London to places like Manchester, Leeds, Liverpool and Newcastle. Each of these cities offers high rental yield and capital appreciation, making them the ideal areas to invest.

Maker smarter real estate investment decisions today

Whether you’re new to property investment or looking to extend your individual portfolio as a buy-to-let landlord, PropertyData offers a wealth of invaluable tools and analytics to help you make more informed investment decisions. With a free two-week trial, you can keep up to date with property prices by postcode, seek out investment opportunities and use historical data to your advantage. Why not sign up today to find out for yourself?

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Transparent data promise

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

Averages shown are the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How do you know the square footage of properties?

We use proprietary technology to read the square footage of properties from agent floorplans. Although we cannot determine the square footage for all properties, we can usually get sufficient coverage. Agents are sometimes known to inflate square footage, and this should be borne in mind as a weakness of this data.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property "price paid" data provided by the Land Registry.

How often is the data updated?

Once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month.

What time period does the data cover?

You can customise the time period using the filter at the top of the view. The default time period is up to 9 months back from today's date. The latest data covers the period up to 2022-03-31, although some sales that took place before this date may still be added in the coming months.

How is the raw data processed?

No additional processes are applied to this data.

What are the statistics used?

Averages shown are the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property "price paid" data provided by the Land Registry, and Energy Performance Certificate (EPC) data provided by Ministry of Housing, Communities & Local Government.

How do you know the square footage of properties?

We match the Land Registry data to EPC data provided by the MCHLG. Due to the fact that not all properties sold have had an EPC and vagaries of addressing in the UK, we are not able to determine the square footage of all properties, but we can usually get sufficient coverage.

How often is the data updated?

The private paid data is updated once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month. The energy performance certificate database is updated monthly.

What time period does the data cover?

You can customise the time period using the filter at the top of the view. The default time period is up to 9 months back from today's date. The latest data covers the period up to 2022-03-31, although some sales that took place before this date may still be added in the coming months.

How is the raw data processed?

No additional processes are applied to this data.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Room let listings on SpareRoom, the UK's biggest room letting website.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from SpareRoom, they are soon removed from this tab.

How is the raw data processed?

Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded. Yields are calculated by comparing only properties with the same number of bedrooms, e.g. 3-bedroom properties for rent with 3-bedroom properties for sale.

What is the yield calculation used?

The calculation used is (average_weekly_asking_rent * 52 / average_asking_price), expressed as a percentage. It is a top-line gross yield, meaning no expenses are considered.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from Zoopla, Rightmove or Spareroom, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Yields are calculated by comparing only properties with the same number of bedrooms, e.g. 3-bedroom properties for rent with 3-bedroom properties for sale. For the SpareRoom data, hypothetical properties consisting of two to six average double rooms with shared bathrooms are used to derived average rent. For all sources, listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What is the yield calculation used?

The calculation used is (average_weekly_asking_rent * 52 / average_asking_price), expressed as a percentage. It is a top-line gross yield, meaning no expenses are considered.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property "price paid" data provided by the Land Registry.

How often is the data updated?

Once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month.

Zoopla Zed-index

What time period does the data cover?

The data covers transactions in the last six years

How is the raw data processed?

No additional processes are applied to this data.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The listings data is updated in near real-time. The Land Registry data is updated once per month when released, typically towards the end of each calendar month covering up to the end of the previous calendar month.

What time period does the data cover?

The price paid data shown goes back to January 2015. The listings data is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the calculations used?

Average sales per month are for the last 3 finalised months. Turnover is average sales per month divided by total for sale. Inventory is 100 divided by turnover.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The listings data is updated in near real-time. The Land Registry data is updated once per month when released, typically towards the end of each calendar month covering up to the end of the previous calendar month.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

Where does the raw data come from?

We receive data on the extent and corporate ownership of all land titles in England & Wales from the Land Registry.

How often is the data updated?

The data is updated once per month when released, typically in the first few days of each calendar month.

What time period does the data cover?

This is an ownership snapshot - the data represents ownership as recorded by the Land Registry at the last monthly export.

How is the raw data processed?

No additional processes are applied to this data.

Where does the raw data come from?

We source different expert forecasts Savills, Knight Frank, OBR

How often is the data updated?

The data is updated annually when new forecasts are released, typically towards the beginning of the year.

How is the raw data processed?

We calculate a consensus forecast using a simple mean average.