Property remains a worthwhile investment: true or false? According to recent media coverage, property is sustaining its well-earned, positive prospects as an asset class in the United Kingdom, and many professionals are optimistic that the sector’s popularity is unlikely to wane in the long run.
At Braemore, we believe that fundamentals continue to be robust, as valuations and yields are still attractive relative to other asset classes. The recent slide in sterling is further strengthening the draw of UK assets for overseas investors. So, over short and medium terms, we foresee positive outcomes for the sector.
The Bank of England’s indication of an interest rate drop to 0.25% (or less) adds weight to our argument: the income that an investment in commercial property delivers, although quite possibly lower in the immediate future and inevitably liable to some fluctuation, will go on surpassing what is usually available on cash deposits.
The Government and the Bank of England have also made it plain that they are prepared to stimulate the economy through the anticipated period of uncertainty. That could mean a further injection of quantitative easing, and maybe another cut in interest rates and lower corporate taxes: all helpful and encouraging for real estate. Confidence in property portfolios is, we believe, justified, and the sector continues to provide investors with a sustainable, relatively high income in an era of lower-for-longer interest rates.
Joint venture opportunity
The environment at the moment is an unusual one, with various rather unpredictable factors at play. The best investment of all may be a conversation – or even, for those who share a common, opportunistic vision, a joint venture partnership – with a professional advisor who possesses successful experience along with the connections, agility and acuity to take advantage of opportunities presented by today’s market conditions.