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Home > News > An Alternative Property Investment

An Alternative Property Investment

Thursday, March 19, 2020

London residential property provides a Kaleidoscope of opportunity at all ends of the financial spectrum and enough has been written on residential opportunities in these columns to keep investors busy.

If we examine other areas of property investment such as retail, farmland and commercial, the entry levels tend to be very high. It is difficult to find an opportunity in these areas that does not have a price tag of £1 million++.

With the tidal wave of foreign investment entering the London residential market from all over the globe, over the past decade, has come a need for good management services.

This is an area where it is difficult for investors to enter, again because of the inevitable scale of management operations. Some of the bigger property management companies are listed on the London stock exchange but due to their size, tend to be ponderous and incremental growth of 5% p.a. becomes the norm.

The big advantage these companies have for the investor though, is security. Any company in this sector would have a serious spread of landlords and tenants and would be an annual fee collecting machine. This can look very attractive as downside risk is minimal as long as there is a proper, diversified, spread of landlords and tenants supported by another spread of two-year tenancy contracts.

Fees of 10% to 15% tend to be the norm for these companies to collect off rental returns that they manage, but again the handicap is growth, which though steady, remains in the single digit areas of growth.

What would be ideal is finding a young company that is able to link in to large growth opportunities, a company where one can hope for returns of 20%/30% annual growth because the company has the vision and contact base to attract hundreds of landlords and tenants to it’s management services in bulk deals.

This sort of opportunity currently exists in London and if investors have interest in this sector please contact us at www.gihlondon.com or Mandy Wong at [email protected]

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