Londinium Fund
Property speculation in London has generated strong returns for investors over the past few years. BDO Simpson Xavier has undertaken several projects over the last number of years in Prime Central London (PCL), which has produced significant returns for investors.
The Londinium BDO Property Investment Fund has been formed to provide investors with access to property investment in PLC without the day-to-day management issues that investing in property can entail. The investment focus of the fund will primarily be in Prime Central London.
Why invest in UK residential property?
Residential property investment is less volatile than equities and can serve to balance a given portfolio by offering exposure to an alternative asset class to bonds and shares.
Latest government estimates are that the number of households in Great Britain will increase by 188,000 per annum up to 2016. The rate of house building completions currently stands at around 160,000 per annum.
Building completions are running 17% below the level they should be at in order to meet future requirements.
Housing undersupply, together with strong demand will continue to underpin residential prices well into the medium term.
Outlook for the PCL residential market
Foreign money will continue to return to the capital with a proportion of it likely to be invested in residential property. Overseas buyers will still be attracted to the capital with Middle Eastern, Eastern Europe, Far Eastern, American, European and Indian purchasers continuing to be attracted to the city's most exclusive properties, in it's most desirable prestigious addresses (i.e. PCL).
Knight Frank LLP forecast that prices in PCL will stand 14% higher at the end of 2006 compared to the start of the year. This rate of growth compares favourably to the forecast for the UK and Greater London market where prices are expected to grow by 3% and 5% respectively.
"The UK house building industry is delivering 28,000 fewer units than required annually"
- Source: Knight Frank LLP
"From 1984 to 2005, the performance of PCL property has averaged a 16.1% return per annum, compared to 14.3% for UK residential property, 11.3% for UK commercial property, 13.8% for UK equities and 9.8% for UK gilts"
- Source: Knight Frank LLP
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