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CORNWALL INVESTMENT LOCATION GUIDE
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Property investment guide CORNWALL Typically, when we consider the attractiveness of buy-tolet property markets, we look for areas characterised by fast-rising employment and strongly growing economies; markets that are attracting large sums of inward investment and the attentions of major employers. Cornwall can claim none of these strengths and yet it remains a very appealing prospect for property investment. This is mainly a consequence of its outstanding tourism offering, which is helping to drive up both rental and capital values.
CORNWALL FAST FACTS REGION South West
POPULATION 568,000
COASTLINE Cornwalls coastline is 433 miles long featuring more than 300 beaches
TRAVEL AWARDS Cornwall has been named ‘Best UK Holiday County/Region’ by The British Travel Awards for 8 years running
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Why Invest in Cornwall? Property investment in Cornwall is a very different proposition to that of most other regions. Until recently, its appeal has been predicated almost exclusively on the enduring popularity of its visitor economy. Against other measures such as economic productivity and job creation, it performs relatively poorly, but for the investor, that isn’t why the county stands out. Property demand in key parts of the county is often driven by visitors from outside the region; by the droves of tourists, domestic and foreign, who travel here to take advantage of its beautiful beaches, coastline and countryside. Some popular towns see their populations more than double during peak season. In a good year, Newquay will typically expect its population to rise from around 22,000 to well over 100,000. With a general shortfall in accommodation being evident in most tourist areas, this makes it very much an investor’s market.
TOURISM
POPULATION
One of Britain’s most popular tourist destinations.
A growing domestic population.
HOME MOVERS The UK’s most searched-for location amongst home-movers.
LOCATION
Key Points to Consider
Lower investment costs than many other parts of southern England.
Since the Covid pandemic, there’s also been a surge in demand from people seeking to move out of big cities such as London and into more rural areas. In March 2021, The Guardian reported
ACCOMMODATION Restricted supply of tourist accommodation.
that “Cornwall has replaced London as the
CAPITAL VALUE
RENTAL MARKET
most searched-for place to live on the property
Fast-rising capital values.
Excellent rental yields.
website Rightmove, as the coronavirus pandemic sparks a new era of flexible working and lifestyle changes.” Demand from outside the region is therefore a key factor. However, Cornwall’s home-grown population is also rising, and that’s putting further pressure on a market that is already under-supplied. Small wonder then, that average prices here have risen sharply in recent years, and why the prospects for investors continue to look good. 4
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C O R N WA L H A S T H E LARGEST COASTLINE I N B R I AT N .
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AN OVERVIEW OF CORNWALL Cornwall is the most south-westerly county in Britain. Largely rural in character, it has a relatively low population density and its principal industries are agriculture, tourism and fishing. It has only one city, which is its administrative centre, Truro. Taking the form of an extended peninsula, it has both a northern coast, which meets the Atlantic, and south coast, which meets the English Channel. This gives it a considerable span of coastline; an often scenic mixture of cliffs, coastal paths, woodland, beaches, 6
historic ports and fishing villages. The appeal of these areas is heightened by the presence of the Gulf Stream, whose influence makes this one of the warmest and sunniest regions of Britain. As a peninsula, it is ideally suited to tourism, but poorly suited to commerce and many industries that would normally develop around towns and cities with better strategic positions on the UK motorway network. Consequently, much of its economy is predicated on relatively low value sectors and average levels of pay are considerably below the UK average. Conversely, however, its comparative remoteness and lack of urban development have made it extremely popular amongst holidaymakers, retired folk and –
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increasingly – home-workers who want to move to a scenic location that offers more open space and a better quality of life. The population of Cornwall
BREAKDOWN OF CORNWALL’S 568,000 POPULATION 20,300
is slowly increasing but it is
21,000
also trending towards older
54 age band, and the number
ST AUSTELL
21,600
TRURO
of people retiring here has added gradually to the changing demographic.
Cornwall
NEWQUAY
age groups. Over 20% of the population now lies in the 40 to
Devon
CAMBORNE PENZANCE NEWLYN 21,200
27,400 FALMOUTH 22,300 7
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the largest indo r INWARD INVESTMENT IN CORNWALL Usually, the investments that make the biggest headlines in the county focus upon tourist infrastructure. In 2001, one of the best known was the Eden Project, a major visitor attraction set close to St Austell. Featuring a series of biomes, including the largest indoor rainforest in the world, it quickly established itself as one of the area’s most popular tourist destinations. In 2019, before the Covid pandemic, it attracted over 1 million visitors. Since then, other investments have helped to strengthen the tourist offering. 2016, for example, saw the reopening 8
rainforest in the world. of the Jubilee Pool, an Art Deco style lido that first opened in 1935. Bude Sea Pool is another similar attraction along the same stretch of coast. However, investment isn’t only about the visitor economy. 10% of the county’s GDP is generated by manufacturing, and local planners have set a firm foundation for the growth of digital and tech companies, in the shape of superfast broadband infrastructure. Other important developments include: •
The creation of three innovation centres, all
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rgest indoor in the world. supported by the University of Plymouth on behalf of Cornwall Council. They are designed to nurture growth in the creative, tech and media industries, as well as the environmental and health sectors. •
The establishment of three enterprise
zones, specialising in marine enterprise, aerospace and satellite communications. •
The creation of development space
for higher value industries such as advanced manufacturing, as well as office and conferencing facilities for mainstream businesses.
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REGENERATION PLANS FOR CORNWALL A key player in the county’s regeneration is Cornwall and Isles of Scilly Local Enterprise Partnership (CIOS LEP),
• NIGHT RIVIERA SLEEPER SERVICE & CORNWALL MAINLINE:
which seeks “to facilitate sustained growth through long
Two rail infrastructure improvement projects.
term, joined up investment” in the area’s people, places and
•
businesses.
TRAIN CARE:
Relocation of heavy maintenance facilities to Penzance.
Between 2014 and 2016, the LEP secured over £78 million
•
BUS NETWORK IMPROVEMENTS:
that, collectively, are expected to create 5,000 new jobs.
•
WEST CORNWALL BUS INTERCHANGE:
Notable projects recently completed include:
A new bus/rail interchange including improvements
to support these ambitions. The money is now driving numerous regeneration and infrastructure improvements
•
NUMEROUS HIGHWAY IMPROVEMENTS
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NEWQUAY GROWTH AREA:
Valued at £8m.
to Parkway Station and refurbished passenger facilities.
•
SUPERFAST BROADBAND EXTENSION:
Transport improvements along the Newquay Strategic
The scheme has given Cornwall over 99% fibre
Route, connecting to the Enterprise Zone at Aerohub at
broadband connections, making it “the best-
Newquay Cornwall Airport.
connected rural place in the UK.”
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ONGOING PROJECTS INCLUDE: •
DEEP SPACE COMMUNICATION:
and creative economy.” It is expected to open in 2021.
•
THE PORTHLEVEN BUSINESS & COMMUNITY PARK:
Supported by £8.4m of Growth Deal funding, this
New employment space, which will support 40 new jobs across
scheme centres around collaboration between
three business units.
Goonhilly Earth Station and the European Space Agency. Improvement works are ongoing on one of
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‘SMART ISLANDS’ PROJECTS:
the station’s largest antennae, which will support
A series of low carbon infrastructure projects across the Isles of
future ESA and NASA missions and private-sector
Scilly.
space exploration, including missions to the moon and Mars.
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SPACEPORT CORNWALL INFASTRUCTURE
A newly planned horizontal satellite launch site at Cornwall
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HALL FOR CORNWALL QUAYWORKS:
Airport Newquay (CAN), “providing flexible, low cost, and
CIOS LEP notes that this scheme “will deliver a
resilient access to space for small satellite launch systems.”
creative tech hub … featuring offices, meeting
Funding was agreed in February 2020 and enabling works are in
space and circulation space. (It) will be used to
progress.
support post graduates, new talent and start-up businesses to create a new cluster within the digital 11
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ECONOMIC GROWTH IN CORNWALL The local economic partnership and other
of wireless broadband facilities. It recently secured a
stakeholders are clearly making important strides
£50 million investment that will support the creation
towards reinventing the county’s economy.
of an extensive new fibre network. The work is expected to create around 80 jobs, either directly or
In 2019, for example, a coalition of local organisations
in the associated supply chain.
created the South West Institute of Technology (SWIoT). It stated aim is the “development of state-
There are numerous similar examples in
of-the-art facilities for training in technical subjects
sectors including food, mining, digital, sports,
to create Britain’s next generation of highly skilled
communications, engineering and more. Across the
technicians and engineers.”
region, there is a quiet upwelling of higher-value, future-focused industries.
The Institute will deliver a range of higher-level courses directed towards careers in the digital,
This is important for property investors because
engineering and manufacturing sectors. Operating
if more local residents secure higher-paid jobs,
as ‘virtual college’, it will facilitate training in
so their average spending power improves. Better
subjects such as engineering, digital technologies
employment prospects also tend to attract in more
and construction. Partners include the University of
residents, of course. This all helps to raise total
Exeter, the University of Plymouth and a host of local
demand for rental accommodation and puts upward
colleges. Employer partners include Goonhilly Earth
pressure on rental values. Similarly, any improvement
Station, the Met Office, and various engineering and
in average living standards will also tend to drive
manufacturing companies.
house prices higher.
In addition, organic growth on the part of local employers is helping the region’s revival. One of the fastest growers has been the connectivity provider Wildanet, which is playing a key role in the expansion
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‘TWO CORNWALLS’ For the county’s long term economic prospects, the
its regular inhabitants.
growth of domestic companies bodes very well. However, the reality is that Cornwall has a lot of ground to make up.
This can partly be ascribed to Cornwall’s peripheral
Average productivity and earnings are well below the UK
position on mainland Britain, together with its reliance on
norm and, in 2017, Cornwall Live reported that the county
traditional industries such as agriculture and fishing. It
had been named “the second-poorest region in northern
does not offer a good strategic location for companies that
Europe.”
seek to distribute goods throughout the UK, and its lack of big cities means that it generally fails to develop major
Reports of deprivation often surprise visitors because
concentrations of skills in the way that other regions might
this is not what they see as they sit in seaside cafes or as
attract, say thriving clusters of life-science specialists or
they walk along attractive coastal paths. Commentators
big financial institutions.
sometimes remark that there are two Cornwalls – the one that visitors see, and the one that’s experienced by many of
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Parts of inland Cornwall rank as some of the UK’s poorest
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wards, so the county’s popularity amongst tourists,
The county certainly has its economic challenges although,
retired folk and country-lovers creates something of a
as previously noted, these are slowly being addressed and
contradiction. Local residents typically earn much less
fortunes turned around.
than the UK average, and yet average property prices are noticeably higher.
However, even before the results of any large-scale regeneration start to become apparent, there is already
According to CIOS LEP, “33.8% of employees are earning
a shortage of property in Cornwall. If job numbers begin
below the real living wage compared to the 22.8% UK
to rise, and if living standards rise with them, then the
average… (and) CIOS has the lowest levels of productivity
gulf between demand and supply will only widen. That’s
(GVA per hour worked) of any LEP area in England.” It adds
generally a recipe for steadily increasing values.
that “there is also a lack of large companies in the area, providing the lowest proportion amongst all LEP areas.”
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TOURISM IN CORNWALL
Tourism is one of the county’s biggest industries, accounting for well over £1.5 billion per annum, 4.5 million visits, and around 20% of all local jobs. The reasons are obvious enough. Cornwall boasts some of
Cornwall, Malcolm Bell, was in optimistic mood.
Britain’s best beaches and, without doubt, some of its best
Based on previous patterns and ongoing investment
weather. It’s also something of a mecca for surfers, and for
in the local tourism offering, he said he expected the
watersports enthusiasts more generally.
sector to keep on growing, “boosting the economy by £521 million and creating up to 8,000 jobs.”
As a largely rural county, it’s also immensely popular amongst walkers and those who simply want to escape
Of course, the pandemic scotched any immediate
the everyday madness of city living. Whether for a short
growth ambitions but the same longer-term
family break, a second home or for permanent retirement,
expectations hold good. With the global vaccination
Cornwall represents the quintessential getaway.
programme rolling out, many expect tourist activity to return close to normal by 2022, and in the
In 2019, around a year before people first started to
meantime, local hospitality businesses are looking
become familiar with the term Covid-19, the head of Visit
forward to a year of bumper demand on the part of
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domestic tourists. Speaking to his local newspaper, Mr Bell pointed to growing demand from the US market, and said that the “next 10 years would see a campaign on skills in the tourism and hospitality industry to boost recruitment and long-term careers, providing the industry with the workforce it needs.” By the end of 2020, a year that saw record bookings by British holidaymakers, Cornwall Live interviewed Mr Bell again, asking whether the region was getting ready “for the tourism
4. 5 m i l i o n tourist per year
bounce-back.” He said that, overall, Cornwall’s tourism businesses lost around £800m to the lockdown, but many jobs and businesses were sustained by government intervention, in the form of the furlough scheme and support for the self-employed. He added that “next year (2021) could be a bumper year, but there is no guarantee… We’re working on a campaign to attract visitors to Cornwall in the winter months (and if successful) it will give us the necessary start to get ready for
what could be, if all goes well, a very good year.” Regardless of what happens in 2021 – a year that many tourism industry professionals still expect to be turbulent – Cornwall’s longer-term future looks good. The pandemic will have prompted many Britons to become first-time visitors in 2020 and that could help to start lasting family traditions that boost domestic demand long into the future. Moreover, in 2022 and beyond, international travel is likely to reopen more generally and all of Cornwall’s historic strengths should return to the fore. 17
TOURIST MARKET DATA Cornwall scored very highly for categories including shopping, eating & drinking, places to visit, quality of the beaches, parks/open spaces, nightlife/evening entertainment, and a feeling of welcome. Source: Cornwall Visitor Survey 2018/19
BEST UK HOLIDAY DESTINATION BUDE 4.8 MILLION 8% 14.7 MILLION 68% CONSTANTLY VOTED
VISITORS IN 2018/2019 STAYED OVERNIGHT ACROSS THE COUNTY.
IN CORNWALL, IS CONSISTANTLY VOTED ‘BEST PEOPLE VISITED THE COUNTY FOR THE UK COASTAL RESORT/TOWN’. DAY 2018/19. THE AVERGAE OVERALL
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STAYED IN SERVICED
OF VISITORS LIVED OUTSIDE THE SOUTH WEST.
7.18 NIGHTS
LENGTH OF STAY WAS 7.18 NIGHTS.
ACCOMMODATION.
OF VISITORS IN 2018/2019 WERE FROM OVERSEAS.
45%
OF STAYING VISITORS STAYED OVERNIGHT OF STAYING VISITORS BOOKED THEIR VISIT WITHIN A MONTH OF IN A SMALL COASTAL TOWN/VILLAGE. THEIR ACTUAL VISIT.
38%
OF ALL MULTI-DAY VISITORS STAYED IN SELF-CATERING ACCOMMODATION.
59% 37%
£2.8BILLION & 54,000 JOBS TOURISM CONTRIBUTED TO £2.8 BILLION OF BUSINESS TURNOVER IN THE COUNTY ECONOMY AND SUPPORTED 54,000 JOBS.
88%
OF RESPONDENTS TO THE
31%
CORNWALL VISITOR SURVEY HAD VISITED CORNWALL BEFORE.
RESPONDENTS SAID THAT THEY USUALLY VISIT CORNWALL AT THE SAME TIME EACH YEAR.
OF STAYING VISITORS WERE ON THEIR MAIN HOLIDAY OF THE YEAR. 19
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Bude, cornwall Bude is a good example of a typical Cornish tourist
received £41,321,200 in tourism spending. This marked a
destination. According to data from 2017 compiled for Visit
steady and continuous rise over the previous five years
Bude, it was the subject of 142,600 staying trips, of which
(compared against £35,696,000 in 2012.) This, together
just 8,500 originated from overseas. Like many other
with expenditure from day visitors, produced a total
local resorts, it received the great majority of bookings
tourism income of £59,524,700, which was £5 million
from domestic holidaymakers, suggesting good resilience
more than in 2012.
against any Covid-related downturn in overseas travel. In September 2020, figures published by Zoopla found that In all, the resort catered for 722,500 visitor nights, and
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demand for accommodation in York had risen by a massive
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28% over the previous 12 months. Findings from the same report included:
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16% Stayed in serviced accommodation
•
33% stayed in self-catering accommodation
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22% stayed in tents/caravans
•
18% stayed in holiday centres
•
9% stayed with friends and relatives
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CORNWALL’S HOUSING MARKET
2020 was an unusual year by any standards, but it didn’t stop certain local postcodes from achieving significant capital gains. We noted earlier that there is considerable inequality
Source: Cornwall Live / Land Registry’s price paid
across the county, and that has been evident in the way
data.
prices have moved. In economically disadvantaged areas, job losses and the rising cost of property have led many
However, in more upmarket, tourist-friendly
permanent residents to feel financially hard-pressed.
locations, and in neighbourhoods favoured for
As consumer sentiment falls, so average values tend
second homes, the reverse has been true. The
to dip in sympathy. That has certainly been the case in
Covid pandemic prompted tens of thousands of
some neighbourhoods, which have seen drops in average
city-dwellers to revaluate their living arrangements.
property values, including:
Recognising the viability of home-working, many
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NEWQUAY - £15,000 DIFFERENCE
•
REDRUTH - £7,000 DIFFERENCE
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FOWEY - £6,200 DIFFERENCE
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have decided to leave the bustle, stress and higher prices of London, and consequently, they have put a higher priority on the quality of their surroundings.
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SHORT ERM MARKET SET TO DELIVER The result has been a small exodus in the direction of Cornwall. In March 2021, Rightmove declared the county the most searched-for place in Britain, noting that “flexible working and lifestyle changes … have fuelled a surge of interest in relocating to rural locations.” Reporting the findings, The Guardian notes that “rural locations and coastal towns and villages (are) at the top of the property search list.” It adds: “The biggest shift in the proportion of city dwellers looking to relocate has been in London, where 52% of inquiries are about moving out of the capital, compared with 39% a year ago.” Cornwall has evidently been at the top of many people’s wish-lists, and average values have begun to respond. Some of the recent regional winners in terms of capital gains have included:
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PADSTOW - £111,250 INCREASE
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ST AGNES - £65,000 INCREASE
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PORT ISAAC - £62,500 INCREASE
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THE ROSELAND - £61,050 INCREASE
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PRAA SANDS - £58,500 INCREASE
In short, while the mainstream market for AST rentals looks less than promising, the short stay tourism market looks set to deliver strong gains in the coming years. 23
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HOUSING SUPPLY
at the county’s construction rates might suggest that all is well. In its Cornwall 5 Year Housing Land Supply
Average values are generally dictated by the
Statement (October 2020), Cornwall Council announced
fundamental economic forces of supply and demand.
that it had delivered 129% of its calculated housing
As the tourism market recovers and as more people
requirement so, on paper, supply appears to be on
choose to move to Cornwall from the cities, it seems
track. However, supply is not distributed evenly across
clear that housing demand can only increase in the
the region and some of the locations most in demand
coming years – and that’s to say nothing of the county’s
amongst tourists, house-movers and retirees are also
natural population growth. That should all tend to push
the areas where supply is most restricted.
capital values upward and keep rental demand very strong.
Often, the most sought-after, scenic resorts are set in picturesque coves where planning consents restrict
On the supply side of the equation, a high-level glance 24
potential for further construction, so there’s a natural
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limit to what can be built. That certainly seems to be
is exceptionally high and where, as the threat of Covid
the case in many of the county’s best-known towns
recedes, interest from buyers and tourists will only
and villages, and prices there have risen sharply, as the
intensify.
Land Registry data attests. Consequently, there is a clear dichotomy between Another supply restriction is the number of second
Cornwall’s residential rental market and its short-
homes and private holiday properties that sit empty
stay tourist market. The former is beset by economic
in Cornwall’s coastal towns. In December 2020, a
problems, but the latter is faring very well.
freedom of information request revealed that the county had the highest number of empty houses of
When it comes to the tourist-focused property markets
any local authority area in England. It had 18,621 empty
of Cornwall, both supply and demand factors look to
houses, of which 13,642 were second homes. This
be driving in the direction of higher capital and rental
further restricts availability in a market where demand
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RENTAL YIELDS According to LiveYield in March 2021, average rental
that short-stay property produces far superior returns.
yields in Cornwall varied considerably by postcode. At the lower extreme, PL28 (Padstow area) delivered
For example, looking at Zoopla listings in March, a typical
average gross returns of only 2.3%, while TR5 (St
2-bedroom end terrace AST in Liskeard might be let
Agnes) yielded 7.3%.
for around £675 pcm, and a 3-bedroom semi in Truro might go for £950 pcm. For landlords, there is nothing
However, it’s important to recognise that these
especially surprising about these numbers. However, a
postcode-based figures don’t differentiate between
one-bedroom holiday property in Liskeard might deliver
the returns on longer-term assured shorthold
investors a weekly return of nearly £900 in peak season;
tenancies and those on short stay holiday properties.
which equates to well over £3,500 pcm.
There is scant independent data to quantify the difference in yields but anecdotal evidence suggests
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Of course, prices and occupancy rates will vary by the
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season, but The Telegraph recently estimated that when averaged out across the year, “Cornwall has the second highest holiday let yields in the country at a rate of 6.1 per cent.” Significantly, despite the pandemic, average rents have continued to rise. According to ONS, they have increased by an average of 2.5% since May 2020. With inflation currently running at around 0.7%, this represents a significant real-terms increase.
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Property Market Predictions for 2021 and Beyond Like 2020, 2021 is expected to be a turbulent period, during which property market trends may be very different from their usual patterns. Covid will remain a factor for the next few months at least, and that could have a bearing on tourism industry figures this year. However, our experiences of 2020 might teach us something important. Despite the constraints imposed 28
SOLD PRICES IN BUDE WER U P 20% O N P R E V I O S Y E A R . by lockdowns, it was a year that saw strong price growth in many markets. At the time of writing (March 2021), Rightmove notes that “Overall, sold prices in Cornwall over the last year were 12% up on the previous year.” Plumplot offers very similar figures, indicating an average annual gain of 11%, equivalent to £30,300. Significantly, many of the county’s most popular tourist spots did considerably better even than this. For example, Rightmove notes that “sold prices in Bude over the last year were 20% up on the previous year.”
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IN BUDE WERE PREVIOS YEAR.
real phenomenon in the property market, and Cornwall’s topranking position in Rightmove’s search rankings stands as clear proof of people’s growing preference for coast and country. Likewise, there is no credible prospect of the cost of borrowing rising by any significant degree in the near future, so homebuyers and investors have reason to feel secure in their financial planning.
Whether an investment delivers 12% or 20% gains, these are all undeniably impressive figures. What’s
Finally, with the vaccination programme forging ahead
more remarkable is that they were achieved during
and seemingly having a marked effect on transmission
a period that many described as ‘disastrous’ for
and hospitalisation rates, there are excellent grounds for
the local tourism industry. This suggests that the
confidence in the future of Cornwall’s short-stay holiday rental
market has a lot more going for it than visitor appeal
sector. Many expect it to return to close to normal in 2022.
alone. Several factors will almost certainly have contributed to these price hikes – not least the
These factors underpin growing confidence in longer term
stamp duty holiday, the low cost of borrowing and
gains. This is true to a lesser extent at the regional level:
a greater appreciation for space, both indoors and
Savills, for example, forecasts that average values in the south
out.
West will rise by a cumulative 18.7% by 2025. However, in markets where demand is highest, and where supply is most
Crucially, many of those same factors will be at work
severely restricted, investors can expect to see average values
in 2021 and beyond. ‘The Race for Space’ is now a
rising considerably faster.
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WE LOOK FORWARD TO HEARING FROM YOU For more in depth information in relation to property investment in Cornwall, or if you’re just looking for some professional advice, please contact our office, visit our website or drop us an email, you can also visit us at our brand new offices. Please use the details below. Are team of professionals are here to help in any way possible, please don’t hesitate to get in touch. We look forward to hearing from you.
Kinnerton House Bell Meadow Cuckoos Nest Pulford Chester CH4 9EP 01244 34 33 55 sales@residential-estates.co.uk www.residential-estates.co.uk
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