opportunities for capital growth
High capital growth is the primary objective for many investors,
including those looking to fund their retirement pension. There
are few opportunities associated with an acceptable level of
risk that are capable of producing even moderate returns.
Salvus Property Advisors argue that a carefully managed
investment in Prime Residential Property, however, should be
able to deliver returns in excess of 15% p.a. over five years.
amass tax-relieved wealth in qualifying pen- managed investment in Prime Residential
sion pots. Property would yield significant returns at
Earlier in this edition, the Pensions Minister each stage of the investment process, from
Angela Eagle MP, argued that investors in pen- assessing a project and providing finance for
sions must take a more pro-active role in how the initial acquisition, through the structured
their investments are managed if they are to funding of a project by way of a balance of
ensure that they achieve their retirement debt and equity participation, to the comple-
objectives. tion of a development and its subsequent sale.
There is evidence that investment in resi- This proposition would appear to include
dential property has maintained a steady in- sufficient safeguards to absorb any small ad-
crease in underlying value, even taking into justments which might occur while the UK
account periodic corrections. In theory at economy is changing direction.
least, property funds could help assist inves-
tors reach their objectives.
A Nationwide Building Society report pub-
Investing in Prime Residential
lished in April 2009, for example, shows that Investing to achieve high capital growth is the
there has been an underlying growth in prop- primary objective for many different types of
erty values of 2.9% per annum from 1979 Q1 to investor, including those looking to fund their
early 2009, and that the ‘reduced’ property retirement pension.
prices (as at the date of the report’s issue) are Managed funds as a whole have a variable
exactly at the point where the long-term trend track record, resulting in significant levels of
line predicts that they should be at that time. investment being tied up in managed equity
Developing a profitable strategy for invest- funds which radically underperform relative
ment in property requires insight and real ex- to the market.
perience across that marketplace. An actively The actual figure is necessarily an estimate,
but Bestinvest, the independent investment
manager and financial adviser which moni-
tors this feature at half yearly intervals, re-
ports that investment in managed equity funds
underperforming the market stood in May 2009
at £7.67 billion.
Where the demand is for an income stream,
with less emphasis on capital growth, inves-
tors find their options equally limited. With
interest rates reaching a historic all-time low
point early in 2009, conventional deposits have
had to be rejected as a source of revenue.
There are few opportunities associated with
an acceptable level of risk that are capable of
producing even moderate returns. A carefully
managed investment in Prime Residential
Property should be capable of delivering
returns in excess of 15% p.a. over five years.
54
The Informed Executive
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