A leading national survey of values and trends in the holiday and caravan park markets has revealed clear reasons for optimism, based on their performance in 2014.
The twenty-fifth annual Market Report from our specialist leisure team says the picture to emerge from its analysis is encouraging, compared to preceding years, with the number of park sales included well up on the 2013 figure.
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Warning against complacency, however, the report says the markets remained somewhat patchy, with relatively few potential buyers able to be selective about purchases and a high number of agreed sales failing to complete during 2014. It also says that business profitability, actual or potential, continued to exert a major influence on sale prices.
Highlighting the Market Report’s key findings in individual sectors, Chris Tucker, partner, said: “Holiday parks clearly enjoyed a strong trading year in 2014. Almost 40 per cent of owners responding to our online survey said their earnings were rising and 55 per cent that profitability was holding up, with only six per cent reporting a decline in income during the year, for example.
“Demand for residential parks remained relatively strong too, provided these weren’t over-priced, relative to pitch fee income, as there was clearly a maximum the market was prepared to pay, compared to rental yields. Further good news was the absence of evidence from our research that new regulations covering matters such as pitch fee reviews and site rules had a measurable negative effect on park values.”
Mr Tucker said the prices of both static holiday and touring pitches rose slightly in 2014, with those of residential pitches remaining steady.
He said: “The average sale price of touring park pitches increased from £7,500 to £8,300 during the year, thanks to factors such as improved trading conditions, the return of first-time buyers and improved bank support. It may also have been that vendors who had previously postponed sales decided to take the plunge in 2014, believing market conditions had improved, which may have led to higher quality parks changing hands than in previous years.
“Also, after slight falls since 2011, the mean value of static caravan pitches rose from £15,000 to £16,000 in 2014, with the gap between the highest and lowest figures – now £21,000 and £11,000 respectively – narrowing slightly during the year.”
Mr Tucker said the average residential park pitch value remained unchanged during 2014 at £24,000, though there was a broad array of prices evident, ranging from £17,000 to £33,000.
He said: “As pitch fees will have increased with the Retail Price Index and the market for new and used park homes has improved, residential parks now offer even better value for money than before and represent an extremely safe long-term investment.”
Mr Tucker said all these broadly positive developments had been encouraged by often-heartening macro-economic indicators during 2014. Helpful features had included Gross Domestic Product growth, stable and low interest rates, plus falling unemployment.
Turning to 2015, Mr Tucker said: “We expect these broadly positive trends in the holiday and caravan park markets to continue, helped by factors such as the long-awaited rise in real earnings being maintained and loan finance becoming more widely available. We also expect last month’s Autumn Statement announcements of a continued freeze on fuel duty, Stamp Duty reforms aimed at boosting residential property transactions, and £15bn worth of infrastructure upgrades, including 84 road improvement projects, to have stimulating effects on these markets.”