Investors should look to balance their property portfolios by purchasing several investments across a range of markets in order to spread the risk, advise experts.

As with other investments, property investors should be aiming to diversify their portfolios to ensure that the risk factor is reduced. Whether the portfolio is made up of overseas investments or those within the UK market, diversification balances a portfolio, allowing the investor to attain better risk-adjusted returns and benefit from economies of scale.

Simon Zutshi, managing director of the Property Investors Network who will be exhibiting at the Property Investor Show later this month, commented on the recommended structure of an overseas property portfolio: "Sound overseas property portfolios should ideally contain investments spread over several markets with different levels of maturity as this protects against market changes or instability."

"Properties in a more mature market such as France or the UK have higher prices than in other countries but carry a lower level of risk. An investment in one of these traditional markets could therefore be balanced by investments in an emerging market such as those in Eastern Europe where properties are less expensive and potentially offer higher capital returns, but at a higher risk."

Investors should also consider both residential and commercial properties in their portfolios if they want to spread the risk. Commercial property can commonly provide yields of around 10% per year, and has produced strong returns on investment for many in the past.

Investors should consider diversifying into offices and retail space, with student lets also a popular choice. With REITs set to be introduced next year, which allow investment in commercial property funds that are exempt from corporation tax, investment in commercial property is likely to increase considerably.

Ranjan Bhattacharya, founder of YourPropertyEmpire.com, who will host several seminars as well as exhibit at the show commented: "When people think about diversification in the UK, they tend to assume that they need to choose different locations to invest in."

"Instead, I would encourage them to stay in one area but to invest in different types of property which appeal to different tenant types. For example owning a shop, a student flat and a family house all within the same area will give you all the diversification your portfolio needs."

"This way, investors have the advantage of knowing the area and not having to start from scratch in each new location, whilst successfully spreading the risk and benefiting from economies of scale."

Nick Clark, managing director of The Property Investor Show said: "Research conducted after the last Property Investor Show revealed that 75% of visitors already own at least four properties, and a recent survey indicates that almost half of these (45%) have purchased properties in a diverse range of markets."

"It is encouraging to see that investors are already starting to balance their property portfolios, realising the importance of spreading the risk. This is a trend that we are likely to see more of in the future as the property investment market continues to develop and mature."

To find out more about the Property Investor Show (22-24 September) at the ExCeL Centre in London’s Docklands, visit www.propertyinvestor.co.uk.