Safe-haven assets need smart management

As global stock and bond markets continue to experience heightened volatility due to a mix of geopolitical tension, inflationary pressures and shifting monetary policy, many investors are re-evaluating their portfolios. And a clear trend is emerging of them moving capital out of these markets and into perceived safe-haven assets, including cryptocurrencies as well as the more traditional sanctuaries of gold and real estate.

The numbers tell the story. The gold price has risen by more than 20% in the past few months and recently broke through the $3300 per ounce barrier, reflecting a classic investor pivot during times of uncertainty. Similarly, property sales in high-demand rental areas are rising rapidly now as investors turn back to real estate as a proven vehicle for both wealth preservation and income generation.

The main factors underlying this trend include continuing affordability issues for many renters who might otherwise become homeowners. Many households are still dealing with the financial stress caused by persistently high inflation and interest rates over the past few years, as well as steep current cost of living increases. This is sustaining strong rental demand.

Urbanisation and employment uncertainties are also playing a big role. As masses of people worldwide continue to migrate to cities in search of opportunities and job markets remain fluid and unpredictable, renting offers them a more flexible, lower-commitment option.

This confluence of forces makes investment in rental property particularly attractive at present, and returns are being buoyed not just by high occupancy rates, but also by shifting tenant profiles. Increasingly, younger renters earn their income online or at least work remotely, which reduces the risk of default due to their home also being their "office". 

In addition, many seniors who are homeowners are turning back to renting now, either because they can't afford rising property taxes and the ever-increasing costs of insurance, security and upkeep or just because they want someone else to be responsible for property maintenance while they spend more time doing things they like. (see below).  

However, it's vital to understand that with these promising returns comes a heightened need for professional property management such as that provided by our Chas Everitt rental teams, especially when investors are new to this market.

The digital economy many have globalised the rental pool and made it easier to attract prospective tenants, but it has also created much more complexity, especially when it comes to thoroughly checking the creditworthiness and payment records of applicants, and sticking to the standards required to properly protect landlords against fraud and rental defaults.

The ability to manage both short-term and long-term rentals, ensure regulatory compliance and maintain high tenant satisfaction further adds to the need for specialised knowledge and systems.

In short, the flight to hard assets such as gold and real estate may be a familiar move in uncertain times, but these days, that should be accompanied by a strategic decision to ensure the proper management of those assets.