2014-04-25 10:13:03 -
There’s a general buzz around property-based funds at the moment. The IMA’s latest figures show that Property was the second best-selling IMA sector in February of this year with net retail sales of £298 million this is the highest since January 2010.
Net yield on UK property is currently running at around 6.1% which compares very favourably to gilt yields which stand at 2.75%. The historically low UK base rates has resulted in investors turning to funds and with a 6.1% net yield on UK property it’s no wonder that property-based investment funds have grown in popularity.
Simon Morris, an Independent Property Advisor to Investment Funds suggests that there are signs that Investors are keen to maximise returns with property and also
happier to take more risk if the returns are attractive enough.
“Higher returns are possible with investment into the right type of property in the right locations. Commercial and real estate properties need to be chosen carefully, whilst there may be an element of risk undertaken, property-based funds are currently providing high net yields.
“Retail and commercial properties could be some of the best performing subsectors of an overall buoyant UK property market.”
The UK economy may not be quite clear of the downturn which began in 2008, but the UK economy remains one of the strongest economies in Europe. Investors are therefore looking to return their cash into the market and property, if chosen correctly, is a popular choice at present.
Simon offers the following tips for funds looking to increase the level of properties within their funds;
1. Retail and Office based properties show attractive rates of return, just ensure that the location is right.
2. Location – UK-wise London and Manchester are hot spots for all the right reasons. Some areas have reported property prices rise by as much as 18% recently.
3. Lower risk – high yield safety is possible with funds that offer your initial investment is safe and fixed return deals are possible.
Whether or not you see the UK property market as overvalued in the short-term there do seem to be a number of “tailwinds” which will support rising prices for the foreseeable future. And for longer term returns – Property will always remain attractive.
Simon Morris is an independent property advisor working with Funds and Investment Companies to ensure property chosen for funds and portfolios delivers agreed return based on low risk.
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