While it would be incorrect to assume that private client money accounts for the majority of investment in the UK property fund industry, this sort of investment vehicle has shown to be popular with smaller investors. Institutional investors dominate these funds since they can receive a wide range of investments in a short amount of time. They may, in principle, redeem their units like any other private investor, but because their typical investment sizes are much larger, they tend to be long-term investors.
It's tough to establish a diverse portfolio of assets if you're a tiny real estate investor, say with less than £100,000 to invest. If you bought one home, you would most certainly pay more than £100,000, necessitating extra financing, but it is conceivable to buy £10,000 tranches in ten separate property funds, for example. If done appropriately, this might provide you with exposure to a wide range of markets, lowering your individual property asset risk.
Because they are pitched as long-term investments, the great majority of property funds are not even listed on the stock exchange or have a liquid secondary market. Despite the fact that property funds have cash on hand and other near-cash assets, the great bulk of their capital is invested directly in the real estate market.
The city continues to lead new residential launches, accounting for about a third of all new residential releases in H1 2021, with 19,571 units out of 61,010 total. Investors are demonstrating resiliency and adjusting to the changing market conditions. Lockdowns were eased in the first three months of 2021, giving investors a firsthand look at the post-pandemic environment. As a result, risk re-rating occurred, and asset allocations changed in Q2 2021.
One of the greatest commercial markets in the country is in Hyderabad. Hyderabad is growing as a top residential market as a result of its high quality of life, and demand is expected to continue to rise. For investors, it will continue to be a favoured market.
Property is a relatively illiquid asset, whether you invest directly in it or through one of the many property funds now available around the world. At any given time, there will be buyers and sellers, but matching prices, completing transactions, and receiving settlement proceeds do not occur overnight. In light of the Brexit vote and the suspension of redemptions by numerous property funds, the authorities are entitled to investigate liquidity difficulties, but is there truly a solution?
Assetmonk is an online real estate investing platform with locations in Bangalore, Chennai, and Hyderabad. It provides investment options with a 15 to 21% IRR.
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