Investment property is proving by far the most popular asset class in these more unsettled times
Author: C Metalle - June 2009
With the demise of high interest rates and high returns, through speculative and high risk offerings in a rising market over recent years –the financial press, institutions, compliance officers and the majority of the investment industry are focused on educating investors to expect lower yields over the medium term and to consider a balanced portfolio.
This balance is precisely what the customer wants to hear in the current climate, and property is firmly in their thoughts for two reasons:
1. The recent volatility in shares and intangible financial products, have emphasised property as an alternative asset class non correlated but also favoured as a tangible asset that the clients can see, feel and understand;
2. Property prices are at serious discounts to 2007, and maybe bottoming out the cycle offering excellent market-adjusted opportunitiesto produce superior returns.
Generally the lower the risk, the lower the potential reward but with some more recently introduced Guaranteed Investment product the risk is low and the potential reward is high!
An exception to the investment rule!
Guaranteed investment property in Florida
Property in the Caribbean with up to 100% finance available
Aparthotel room investment - 100% Financed
Due to the capital protection, regulated environment and low entry level, these products are superior and lower risk than direct investment in property.
This guaranteed investment product is structured in such a way that certain risks are minimised and your capital is guaranteed:
•product guarantees are provided by an ‘A’ rated insurer and backed up by a €200m cash bond.
•If the value of the asset falls the insurance policy protects the capital that is invested.
•You can redeem your investment before the end of the term, you only need to pay a £100 administration fee for any transferee you may request.
In addition -
•The income on from your investment is achieved via tour operator partners who have 10 year leases on the properties thus providing tenants all year round.
•There is no cap on the level of potential gains so “Capped Returns” does not apply.
•You get an exact proportion of gain relative to your investment so “100% investment participation”.
•Inflation can have an affect but the underlying asset is property which is likely to rise in line with inflation, a strong correlation!
These Investment products after guaranteed capital protection upon maturity. The mechanism for the guarantee far exceeds the limitations of the Financial Services Compensation Fund (48k).
The Investment products are underwritten by an “A” rated global insurer in association with Lloyds of London, so the value of the investment at maturity cannot fall as part of the investment programme.
Product yields are Guaranteed. The mechanism creates medium to high yields from key multi-national covenants, credit risk insured on an annual basis and underwritten by an “A” rated global insurer in association with Lloyds of London throughout the length of the investment term of 10 years.
This range of products appeals to both the comfort factor of having property underpinning the asset base (within a guaranteed environment) but also having the potential for capital growth in a recovery market –perhaps one of the most startling long term growth opportunities in recent decades.
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