guernsey-based vehicle targets returns of 5% over bank base rate
London Central Portfolio (LCP) has launched a fund that invests in the residential areas of Knightsbridge, Mayfair, Marylebone, Notting Hill and South Kensington.
The target size of the Guernsey-domiciled fund is £20m. It will invest in approximately 25 two-bedroom properties in these inner London areas. It will run for eight years.
Each property will be let to high quality, often corporate, tenants. Tenancy agreements will usually be for one year with a six-month break clause and options to renew for a second and third year.
The fund aims to deliver a return of 5% over the UK bank base rate (currently set at 4.5%), during the fund period and plans to offer investors at least a 50% return on the equity invested.
The minimum investment is £100,000 and it will target high-net-worth investors both in the UK and abroad.
Naomi Heaton, chief executive of LCP, said: "We have every confidence in the growth potential of the Central London residential market over the medium to long term.
"The diminishing stock of quality accommodation in the heart of London has created demand for a valuable asset by global investors.
"This is likely to be reinforced by the significant investment into the capital's infrastructure and architecture in the run up to the 2012 London Olympics."
This is further backed up with research from property firm Knight Frank. According to its London Residential Review, which looks at prime London sales and lettings, capital values for prime property increased by 8.2% in 2005 - almost four times the growth seen in 2004 and the highest annual growth since 2001.
It said the strong performance in the prime London market was underpinned by strong international demand as well as affordability constraints which was creating 'renters of necessity'.
LCP launches fund investing in central London residential property
Minimum investment is £100,000
Fund is Guernsey-domiciled
£300bn of liabilities
View from the front row
Transfer from occupational scheme
Appointed by FCA and PSR boards