Residential buy-to-let properties in the North West will be among the UK market’s top performing assets this year, according to Savills.

The agency predicts the segment could offer annualised investment returns of between 8.5% and 9.2% over the next four years.

Savills’ annual cross-sector forecasts also suggest a stronger outlook and opportunity for UK property investment in 2024 as interest rates steady. However, returns will continue to be driven by income potential instead of capital growth, the agency said.

Savills expects to see the “primary sources of financial disturbance” to ease back over the course of next year.

Despite tougher conditions for landlords, Savills forecasts rents to grow by a further 18.1% by 2028. The agency also believes there is still significant opportunity for those less reliant on debt, particularly for those with a portfolio furthest from London.

However, struggles in the private rented sector are also expected to spur on institutional landlords, and both build to rent and purpose built student accommodation are expected to play an increasingly important role looking forward.

Richard Merryweather, Savills joint head of UK investment, said: “The factors that drove falls in UK property values and transaction levels over the last two years are expected to improve in 2024. 

“There will be significant opportunity – especially in the commercial and residential spaces – for investors to buy at the bottom of the market, with a focus on opportunities where capital values have either over-corrected, or where rental growth prospects might be accelerating.”