If you are discouraged from investing in stocks and shares due to recent economic activity, an alternative is to invest your money into a property fund. Such funds are set up so that investors can pool their money to acquire a portfolio of residential or commercial property (or in some cases, to acquire one specific commercial property), here or abroad. They can also be structured specifically to attract investment from pension schemes.
Investing in a property fund continues to provide some advantages to an investor, such as:-
- access to and participation in a market which might not otherwise be available;
- the ability to spread risk through pooling of capital; and
- the benefit of a professional management team.
Certainly, there was a lot of activity in this area eighteen months ago, in anticipation of the market hitting the bottom. But, does it remain an attractive proposition?
There is no doubt that, for funds which have capital (and which do not need to borrow), there are opportunities out there to acquire properties at a good price. There continues to be an appetite amongst investors who wish to invest in the “right fund”, and such funds can generate attractive returns.
In our experience however, “blind funds” (that is, those where the property has not been identified prior to launch of the fund) are no longer an attractive proposition. In the current climate, any fund needs to be targeted towards properties in the right geographic area and it goes without saying that there needs to be a strong management team to drive the fund forward. For commercial property funds, the strength of the financial position of the tenant is also important.
At Morton Fraser our Property Fund team provides a complete service to deal with all issues surrounding property fund investment including structuring, acquisitions, promotion, banking & construction. We are currently involved in setting up a number of funds which will invest in the UK, and abroad.