Andrew Monteath, a consultant at Douglas Gordon Investment Management, tells The Wall Street Journal why he is upbeat on U.K. residential property investment.
The rich have relied on property in prime central London as a safe and rewarding home for their money for centuries. For most, though, a piece of prime London property is not a realistic prospect, as the average property price is about £750,000. But it is now possible to snap up a slice of Chelsea, Knightsbridge or Belgravia for as little as £1,000, through a regulated residential property fund, and you can also hold it in a SIPP.
Luxury-home prices in central London rose last month at the fastest annual pace since April 2008 as a growing number of buyers chased fewer properties on the market, Knight Frank LLP said.
Open-ended residential property fund, The Prime London Capital Fund, has tripled its funds under management after significant investment from an Asian property company.
Spurred by the positive feedback to his presentation at the EMCS Real Estate Forum in May, Stephen Yorke of Douglas & Gordon Investment Management Ltd is returning to Malta this week.
The signs emanating from the UK property market are still mixed. In June, house prices rose according to Nationwide but fell by the estimates of the Halifax. Yet, overall, many market watchers reckon that the unrelenting downward move in house prices we have seen since late 2007 may now have come to an end.
A growing band of investors is betting that a recovery in the housing market is in the offing and has been ploughing its money into residential property funds. Optimism about bricks and mortar has been in short supply over the past year as house prices have plummeted. But bullish commentators claim there are increasing signs that the ailing market is awakening.
Stephen Yorke, chairman at D&G, said the new fund was still only at discussion stage, but that it would most likely have a broader remit than its existing London fund and focus on south-west London and the non-prime area of the market.
A smart house in central London would be out of reach for most private investors, even after the recent price falls. In fact, buyers would in many cases need more cash now than at the peak of the market, such is the shortage of mortgage finance.
In investment terms, commercial property has been a disaster area over the past couple of years. But serious investors — including the property tycoon and “Secret Millionaire” Nick Leslau and Sir Stelios Haji-Ioannou, the founder of easyJet — have recently announced that they are back in. Several property companies, including Leslau’s Max Property, have begun to raise capital in anticipation of a rise in commercial property prices. BDO Stoy Hayward, the accountancy firm, says that prices have begun to stabilise and that the number of transactions began to increase in March. The value of shares in Leslau’s fund has risen by 26 per cent since its launch last week, raising £220 million on the Alternative Investment Market. In the next few months the fund will start buying property, which it will sell before being wound up in 7½ years’ time.
Prime residential property in London is at tipping point of a recovery, according to the manager of the Prime London Capital fund, who says investors should see the benefits within the next six months.
The Fund manager is D&GIM which is based and regulated in Guernsey. The Fund itself is also regulated by the Guernsey Financial Services Commission. Both the Fund and D&GIM are backed by blue-chip names.
It is a property unit trust that invests solely in the very best Prime Central London (PCL) residential property. It invests in the highest quality Prime London real estate.
Interview with Stephen Yorke, CEO and Partner of D&G Asset Management