London Central Portfolio is to launch a new fund investing in prime London residential property. The fund is believed to be the first Shariah-compliant fund investing in the London residential property market.
The Jersey-based fund, London Central Apartments, is timed to take advantage of strong investor demand in the wake of continuing volatility in world stock markets.
Commenting on the launch, Naomi Heaton, CEO of LCP said: “Investors buy into London for its lifestyle and accessibility, but now they are looking for alternative assets that can ride out market fluctuations. Even taking into account the impact of the credit crisis, prices in this tiny six square mile area have risen by an average of 8.2% per annum over the last fifteen years. Combined with this, current rental yields run at approximately 4.5% per annum. Our new fund will offer institutional and private investors access to a professionally managed and diversified portfolio in all of the recognised postcodes.”
Heaton also believes the fund will also be attractive to first time investors, such as professionals priced out of investing directly in London property and has a number of tax efficient advantages: “At a time when people are struggling to invest their pension pots, an added draw is that the fund is eligible for SIPPs, as well as ISAs. Gains from the fund will be taxed as CGT which, at its current 28%, is attractive for higher rate UK taxpayers who are faced with 40 or 50% cent income tax. For non-doms there should be no tax at all,” says Heaton.
Majid Dawood, CEO of Yasaar Limited, the global Shariah advisory firm, commented: “For Gulf investors, there are other attractions. With the GCC market currencies linked to the US Dollar providing an exchange rate benefit to sterling and global market performances being of concern, the London Central residential market is an appealing investment, over and above its unique position and characteristics historically."
The key features of the fund are:
- Target return: 10-13% average annual growth
- Target fund value: £50 million+. Equity Contribution: £30 million, Shariah-compliant structured finance: £20m
- Minimum investment: £50,000 (or less, subject to eligibility)
- Investment Term: Closed ended fund running for 5 years (with 2 annual options to extend)
- Listed on Channel Islands Stock Exchange, domiciled in Jersey
- Eligibility: UK resident, non-resident and non-domiciled investors, SIPPs, SSASs and ISAs, traditional and ethical investors.
With more than 20 years experience in the prime London residential market, LPA says the fund will build a diversified portfolio of individually selected and interior designed one and two bedroom apartments which have greatest appeal to the corporate tenant market and generally the highest yields. LCP achieves an average occupancy above 96%. The manager is targeting a return of 10%-13% per annum over a five year period. Returns will be generated though a combination of opportunistic buying, development uplift and capital appreciation. This is LCP's third prime London residential property fund.
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