The East of England has been named as the most attractive region for property investors over the next 12 months, a Handelsbanken report reveals.
The property investor report shows that 26.5% of respondents found the East of England most attractive, closely followed by North East and Cumbria (24.5%), North West (22%) and South East (21.5%).
Results suggest that respondents are focusing on areas with higher yield characteristics, instead of those with historically strong demand.
London was the most popular investment hotspot last year, however, the capital of the UK has dropped to fifth position with 21%, alongside the East Midlands (21%).
Popularity in the South East has also fallen this year compared to last when it scored 26%.
Meanwhile, 62.5% plan to grow their portfolio in the year ahead. Over a quarter (27.5%) will maintain their portfolio’s current size, and 8.5% aim to exit the market completely.
Of those looking to buy more properties, 70.5% want to diversify their portfolios in terms of geography and sector, with residential flats seen as the most attractive property type by investors.
Elsewhere, the report found that 81% expect the value of their portfolio to increase over the next 12 months.
Nearly a third (31%) believe it will grow by more than 20%, and nearly 50% expect a slight uptick of around 5%.
Optimism was highest in Wales, with 59% of respondents expecting to see a large upswing, the highest across the UK.
The research also revealed that 82% of investors expect demand for commercial property to increase over the next 12 months.
This was marginally ahead of residential property (77%), which Handelsbanken suggests is possibly driven by consistent numbers of workers returning to offices.
On a sectoral level, the three most in-demand sectors among property investors over the next 12 months are residential flats (63%), commercial offices (62%) and residential houses (61.5%).
Support for these sectors has risen dramatically over the last year, with flats up 10% (53%), commercial offices up 4% (58%) and residential housing up 15.5% (46%) compared with 2023.
The three lowest scoring sectors this year are commercial retail (50.5%), student housing (49.5%) and residential park homes (32%).
Handelsbanken UK chief economist James Sproule says: “While headlines over the coming months are likely to be dominated by the general election, interest rate cuts and the ongoing cost of living crisis, these factors don’t seem to be jeopardising investors’ upbeat mindset.”
“The adjustments to capital valuations, often masked by inflation, as well as increases to rents, have resulted in property once again delivering a premium over gilt yields – and opened up the potential for attractive opportunities as the economic recovery progresses.”