Since
the crash of 2008, property has been the asset of choice for investors looking
to make returns. Regardless of stock market turbulence and currency crises, the
value of property, and the returns available for investors, have been on an
upward trajectory. For everybody from international real estate investors, to
retirees investing in buy-to-let as a pension alternative, property has been
the goose that lays the golden egg.
A
recent report issued by MSCI highlights the potential rewards investors can
reap from property investment. Their data shows that US commercial property
funds in 2015 grew a staggering 15.6% according to the PREA/IPD US Quarterly
Property Fund Index1. Even more remarkably, investments in US
commercial property have seen a cumulative return of 129% over the past six
years.
Despite
the good news however, there are downsides that need to be considered before
investing in property. Property for example requires regular maintenance – and
while on the whole tenants can be relied upon to look after your property, and
pay the rent on time, bad tenants can be a real headache, turning your
investment into a full time job. Recent data from the UK for example, shows
that a total of nearly 43,000 tenants had to be evicted from privately rented
properties in 2015. And with geopolitical uncertainty such as Brexit and
elections in the US, France and Germany on the horizon putting downward
pressure on economic performance, these figures have the potential to grow.
Property
investors also need to consider legislative interventions. Housing across the
western world is a key political issue, the reason being, there isn’t enough of
it. As such landlords can often find themselves in the political cross-hairs.
Landlords in the UK for example, have seen stamp duty increased on buy-to-let
purchases, as well as new limitations on the amount of tax relief which can be
claimed against rental income and the upkeep of rented property. Likewise, rent
caps are becoming increasingly popular in cities across the world including
Dublin, New York and Berlin. The new mayor of London has also recently floated
the idea of limiting the rent which can be charged on privately rented
property.
At
the other end of the scale are larger investments, such as Real Estate Investment
Trusts (REITs), which, while generating decent returns, are not as high
yielding as direct investment in the private rented sector can be. The fact
that these investments are managed by large corporations and investment houses
also means that there is often a potential disconnect between returns and the
allocation of those returns to investors. Indeed, a recent report from a
research team in Toronto found that, while REITs had the highest net returns
amongst a sample of asset classes, investors in REITs saw the lowest
allocations – just 0.6% of total asset value2.
Is property worth still it?
There
is no doubt that property investments continue to outperform other investments.
When we look at US commercial property for example, we see it has outperformed
US bonds (up 4.39% over the period 2011 to 2015), stocks (up 13.45%), corporate
bonds (up 4.72%) and commodities (down 10.93%)3. Market fundamentals
would indicate that this situation is unlikely to change any time soon.
Given
the concerns outlined above however, is property still worth it? Set against
bad tenants and political scapegoating, the returns available on property may
begin to look rather less impressive.
The
question is, is there a way to ‘have your cake and eat it’ and enjoy the returns
available on property investments but with less of the potential risks?
A novel approach
One
opportunity to do so are the investments from the Rycal Group, offering entry
to the Carlton James fund which has an investment portfolio focused on the
hospitality sector in the US. Carlton James has been investing in this market
for a while now, delivering returns averaging 17% for the last five years. With
a strategy based upon wide-ranging geographical and market intelligence,
Carlton James look also for additional Revenue Generators – for example taking
into account a development’s proximity to highways, malls and economic
infrastructure – as well as local economics.
Simon
Calton, CEO of the Carlton James Group and Rycal Group, says: “Property remains
an investment of choice for investors around the world, delivering yields which
are difficult to achieve elsewhere in the low interest rate era we find
ourselves in. Traditional property investments however can be quite demanding
and are subject to risks and influences which are completely beyond the control
of investors.
“Property
investments are typically slower to move than other investments, such as stocks
and shares, so exiting a property investment can also be difficult, leaving
investors exposed. There are alternatives however, to small scale personal
investment – the landlord route, and larger scale, institutionally led
investment.
“At
Rycal we work to capture the yields which make property investment so
appealing, while also mitigating the downside risks. We achieve this by
employing wide ranging and detailed intelligence, about everything from the
performance of comparable assets, to the proximity of our developments to
infrastructure such as roads and railways. We also ensure that detailed exit
strategies are in place and ready to be deployed so that, should the worst
happen, our clients are protected.”
“With
a diverse portfolio of properties and deep investment intelligence, Carlton
James offer a genuinely novel approach to property investment, and one we
expect to grow in popularity over coming years.”
For
more information on the Rycal Group and Carlton James investments please visit http://www.rycalgroup.com/newinvestors.
To arrange an interview or comment from Simon Calton, please contact Liam
Thompson at lthompson@sks-london.co.uk
, on +44 (0) 7890 315 537 or via http://sks-of-london.com.
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