Has property market peak shifted focus to small business investment opportunities?
Luke Davis, CEO of IW Capital, discusses the opportunity which small business investing provides
Investment habits have changed rapidly over the last few years in the UK, with individuals leaning on investments to provide them with passive income. Property investing has been seen as a stable investment over the past decade, however, over the past few years small business investing has become an ever more attractive investment opportunity for many looking to help fuel business growth and take advantage of tax incentives from the government.
The UK housing market has registered substantial growth over the past few years, causing property investing to become a popular one for investors over the past few years, with recent news showing that the average house price in the UK increased by £8,000 in February (representing the biggest month-on-month increase for 20 years), this could be seen as an astute investment to make for investors throughout 2022. However, experts predict the growth in UK house prices to flatten out throughout the year, combined with the global supply chain issues and lack of supply, the UK housing market looks ready to endure a volatile year.
The housing market seems to have been affected by its own success however, with average house prices standing at the highest they have ever been - making it harder for investors to start to invest in property. Whilst the property market has grown steadily over the past few years, the small business landscape has seen substantial growth in the UK.
SME investing represents an exciting opportunity for UK investors, providing them with tax benefits and a realistic chance to maximise their returns. In 2021 there were a record 319,000 new businesses registered in the UK, with the number of retailers in the UK increasing 15% - the number of small businesses in the UK now standing at 5.5 million, with recent research showing that two-thirds of the UK workforce want to start their own company. This shows a continued desire, caused by the pandemic, for individuals to start a business of their own in the UK.
With 16% of UK investors looking to back start-ups and newly formed businesses it seems they will be given a platform to continue the success and progression of their companies throughout 2022. The community and investors are ready to back small businesses and small businesses are ready to maximise this exciting opportunity. It seems to be an exciting time for small businesses in the UK and it poses an exciting, alternative investment prospect for investors.
Luke Davis, CEO of IW Capital discusses:
"This past year was certainly a momentous one in the world of investing. The pandemic has had an impact on the UK in ways that we could never have predicted, it has created a new class of investor, an individual who is concerned not just with their investment returns but also in supporting a new future of small business growth.
"Property investing has been seen as a stable investment over the past decade, but SME investing is an exciting option for investors, with substantial growth happening in the small business environment in the UK, small businesses seem ready to continue their growth throughout 2022 - thus providing a chance of impressive returns for investors.
"The EIS could also be an important trend throughout 2022. The EIS can be said to offer a win-win situation for both investors and small businesses - providing SMEs with much-needed investment to provide them with a platform to grow, whilst providing investors with tax reliefs to incentivise this investment. Small businesses and SMEs throughout the UK have benefitted enormously from the EIS in the last 25 years, fuelling growth and job creation at an impressive scale. SMEs are becoming so inventive and versatile with their companies and making sure they are at the forefront of the UK business scene. SMEs are an indispensable part of the UK economy and the outlook for the festive period is a reward for their constant hard work.”
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