investment : commercial property
Housing market in the UK today offers a variety of investment
bets to gain from. Choosing a portfolio is your call though.
A property portfolio comprising mainly of buy to let properties
does not seem so appealing considering the fact that yields are
flattening and capital appreciation has slowed down, but there
are still umpteen ways of making money from the housing market
of UK.
Commercial property funds, spread betting against a house price
index or participating in floats could help out in reducing
volatility or even act as a hedge.
According to analysts investors in commercial property funds
are now stronger than ever than those contemplating buy-to-let, a sector where the returns have not held much
promise over the past one year.
Most decent commercial property funds will be invested in high
quality office and retail space with long term leases of 10-15
years compared to a six month or a one year lease as a
buy-to-let landlord.
Even though residential and commercial properties prices and
rental yields have little correlation but at the same time it is
important for property investors to try and ensure a balance
between the two.
While the optimists point out a soft landing for the UK housing
market in the current year, there are concerns of negative
impact on housing market due to high levels of consumer debt.
On the other hand those taking pessimists view would bet down
low, beneath the spread. There is scope to make up for any fall
in the capital value of your property or the value of the
homebuilder shares, by the profit made by an investor on the
spread bet.
But the investors should bear in mind that as the spr
ead bet is based on average house prices it is not always a
perfect hedge.
Expert opinion: While the property market was perhaps seen as a
difficult call to make and speculate, from a historical point of
view it has been more predictable than the index at FTSE. New
comers should research a lot before entering any of the property
funds and choose a property portfolio having a combination of
both commercial as well as residential properties.