Horizon Asset Management has launched a prime central London share class to its Cayman-domiciled British Property Opportunities Fund (BPOF) to take advantage of the current lack of supply and strength of demand for prime real estate in central London.
The London Growth Share Class aims to achieve long term capital growth from a market that remained robust even during the downturn in the rest of the UK. Much of this market strength can be attributed to the scarcity of supply, which was described last month (March) as being “at record lows”.*
Horizon Asset Management believes that even the rise in stamp duty on luxury properties announced in the Budget will have limited impact on the market because of the strength of demand.
The Knight Frank Prime Central London Index rose by 20.47% over the two years to February 2012 and Horizon believes London property is set to remain attractive for at least five years or more. It is highly attractive to overseas cash buyers thanks to favourable currency rates, London’s ranking as one of the world’s leading cities and favourable tax treatment. This year’s Olympics and a shortage of trophy properties will also support prices.
Bill McClintock, Chairman of BPOF’s investment committee, says over the past two and a half years in particular, demand for purchasers and tenants has hit record levels, forcing rental yields up by more than 25% over that period.
"Because of this, many banks are still willing lenders for property in central London, which promises to continue to fuel the demand from property investors. It therefore remains an attractive investment proposition for many UK and international investors, especially if they use an investment vehicle like London Growth that has no legacy issues from properties bought at the last cycle peak, so all new investments will be dedicated to optimising gains for investors.”
The London Growth share class has a 3% initial charge and a 1% annual management fee. The minimum investment is GBP 65,000 for direct investments or GBP 3,500 through a wrapper such as a platform or a personal portfolio bond.
The BPOF is an open-ended investment company (OEIC) domiciled in the Cayman Islands. It invests in both residential and commercial property, including distressed portfolios, high yield rental units, development opportunities, leasebacks and reversionary gains schemes.
An added tier of asset management can of course deliver additional benefits for certain investors, writes Graham Bentley - just be sure you can justify it to the regulator and, especially, the client
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