International Property Investments

For over a decade, property seems to have been immune from the maxim ‘the value of your investments can go down as well as up’. Faith Glasgow explains what part bricks and mortar should play in a portfolio

There’s nothing new in holding a substantial part of your assets in bricks and mortar - the British have always been terribly keen on owning their own castle, even when they don’t have the ready cash to maintain it. But the past decade has seen the emergence of a new generation of private landlords/buyers taking a long cool look at investment properties, with a view to that heady combination of long-term capital growth from an investment that’s paying for itself in the meantime.

Buying property to let has become a relatively run-of-the-mill process - there are now more than 50 onshore lenders offering buy-to-let mortgages, though fewer cater for the offshore market. And if you want help in assessing the market, choosing a suitable property, finding tenants and managing the let, you’ll find numerous enterprises itching to offer their expertise - for a fee, of course.

International Property Investments & Buy-To-Let

Meanwhile, the London rental market has strengthened recently, according to research by estate agent Knight Frank. Tenant demand was up 15 per cent over the year to March 2001 (notably in the Home Counties), while supply of prime rentable properties fell by 30-40 per cent (particularly in central London) - the latter a reflection of owners deciding to sell rather than rent their properties, in order to reap the benefits of excellent capital growth. As a result, says Knight Frank, prime rental values in London had risen by 11 per cent in the 12 months to March, and by 5.8 per cent elsewhere in the UK.

International Property Investments - Buying property

In other words, if you bought a property for £5000 in 1969, it would have been worth £160,000 in 1999. And if you take into account net rental income as well, the value of that 1969
purchase has increased 40-fold.

Taking a 25-year view, Knight Frank says: “Total returns on residential property have outperformed all asset classes (including commercial property), with the
exception of equities.”