property investment funds
Many opportunities for
profitable re-development
Demand for Prime Residential
It is likely that this pent-up pressure will help
support the assumption that property prices,
Reports from across institutions which moni- once rising, will not falter in the short to me-
tor property prices may differ in their detailed dium term.
analysis of the housing market. But there is Viewing the UK property scene as a whole,
consensus amongst certain analysts that the the National Housing and Planning Advice Unit
lowest point in the present property cycle may reported in September 2009 that the country
have already been reached in parts of the UK. must add between 276,900 and 290,500 homes
The Royal Institution of Chartered Survey- every year to its stock to avoid the rising cost
ors (RICS) observed in its July 2009 Survey of property affecting economic competitive-
that there is “. . . evidence that activity in the ness. That represents about 3-5% more homes
housing market is picking up, albeit from his- than the figure projected the previous year.
toric lows. New buyer enquiries have now in-
creased for nine consecutive months.”
It went on to comment that “There are also
Does the Salvus argument stack up?
more definitive signs that the rebound in en- The property fund launched by Salvus Prop-
quiries is feeding through into increased trans- erty Advisors at the end of October is raising a
actions. Newly agreed sales, measured on a total of £50 million to finance the develop-
net balance basis, increased once again, ment of Prime Residential Property in those
reaching the highest level since August 1999. parts of the UK where economic and social
Meanwhile, the average number of agreed factors are likely to see demand for such prop-
sales per surveyor (over the last three months) erties sustained.
rose for the fourth month in a row.” By way of checking out that business case,
As the property market moves ahead, de- we interviewed property agents and consult-
mand for new homes in prime locations, built ants Knight Frank (overleaf). On the strength
to a very high specification, will increase ini- of its assessment of the underlying market-
tially at a rate greater than in other sectors. place for prime residential, it would appear
that the Salvus case is a reasonable one.
Shortage of prime properties
The fund will be operated and managed by
Consortium Investment Management, which
According to property specialists Knight currently manages collective investment
Frank, perhaps the most important single fac- schemes with a combined asset value of over
tor in demand for Prime Residential Property £1 billion.
being sustained during the economic down- Investing in a property fund is not going to
turn has been the shortage in the supply of be suitable for every investor: it is not a retail
properties in desirable areas. ‘off the page’ scheme. Except for highly experi-
General house building levels across the enced players, it requires professional advice.
country have fallen in line with underlying The Informed Executive cannot make any recom-
economic conditions. By the time that there mendation, but analysis of the business case
is tangible evidence of an economic recovery, would suggest that further investigation would
there may have been a shortfall in house be justified. Returning to the theme of IFAs ad-
building equivalent to between two and three dressed earlier, this is a classic case where
years supply of new houses. independent advisers come into their own. §
The Informed Executive
55
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