The IMA’s latest figures indicate what most people in the property investment industry have known for some time. It is the essential investment for 2014, and that it why there is so much positive noise around the profitability of property investment funds right now. What specifically can we learn from the IMA figures?
IMA’s Top Rankings
In February 2014, the IMA found that the two top selling sectors were UK All Companies, with a monthly net worth of £371 million, which actually stands significantly higher than its standard monthly average over the previous 12 months of £60 million, and Property. According to the IMA, the property sector recorded a monthly net worth of £298. This was in fact the highest figure it recorded since January 2010.
Furthermore, it has been revealed by the organisation that net yield in the UK property sector currently measures 6.1%. This looks favourable when compared with gilt yields, which at the moment, currently stand at 2.75%.
There are, of course, mitigating factors that contributed to these figures. The positive spin on income yields, for example, was clearly impacted by traditionally low UK base rates, along with the fact that the concept of a yield that totals 6.1% in UK based property is appealing to investors for so many reasons; e.g. inflation.
Where in the UK Could Provide the Strongest Returns?
Simon Morris comments, right now those looking to strengthen the property element of their investment portfolio should look at office, retail and other commercial properties. This is because these areas of the industry look set to outperform some of this vibrant sector’s other areas right now.
The UK may not have completely recovered from the ravages of the recent recession, the UK is set to record pre-recession levels of growth by this summer and is currently one of the strongest markets in Europe. That is why investors are looking to reap the benefits of the current UK economic climate and property, if it’s handled carefully, is one of the financial investment industries most popular choices.
Handling property fund investments carefully involves crafting a considered strategy, especially for funds looking to increase the level of properties within their portfolio. Methods you can use to achieve this include:
- Focusing on the booming office and retail space property markets.
- Always considering location: In the UK London and Manchester, property markets are considerably strong right now and some areas have witnessed their property prices rise by as much as 18% recently.
- Remembering a core property investment principle: lower risk – higher yield safety.
Whether you are a person who currently sees the UK property market as undervalued or not, in the short term, you must recognise that at the moment, there are a number of factors that will be conducive to the rising of property prices for the foreseeable future. The great thing about property is that it’s always a valuable long term investment option.