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Dear Investor,
Last week was a good reminder of the long-term benefits of investing in property and the disadvantages of relying upon the stock market to increase your wealth.
In 1997, the FTSE 100 stood at 6150 whilst today at the time of writing (and after an 8.8% rise on Friday) stands at 5161, a loss of 16% over an 11 year period. The real inflation adjusted position is much worse as the purchasing power of the original investment is seriously eroded by rising prices.
In the 4th quarter of 1997, the Nationwide Property Index was 3270 and today in 2008 stands at 9230, a rise of 182%. Given that most homeowners leverage their purchases through mortgage finance, the rise in wealth is substantial.
The present correction in UK property prices presents a serious opportunity for the astute investor looking to increase their medium to long-term wealth. However, in my view now is not yet the right time to re-enter or enter the UK market as even better opportunities are likely to arise at lower prices from 2010/2011 onwards.
Some investors and companies promote the below market value (BMV) notion that a 20% discount in the UK today represents “good value.” It does not, as the “discount to market value” which in today’s market is very difficult to determine will be eroded as prices here continue to fall. A 20% discount on 2010/2011 prices will be worth attaining.
Property Investor Show
I visited the Property Investor Show on Friday at the Excel Centre in London. Jet-to-Let Magazine had a stand and distributed over 500 magazines to visitors. The exhibition was much smaller than previous years and the attendance was lower but nevertheless, the investors who visited our stand were experienced and serious and fully aware of the benefits of investing in property.
Without doubt the predominant theme of the show was jet-to-let overseas property investment with the lead countries, by exhibitor, being Cyprus, Panama, Italy, Romania and US repossessions.
15 to 30% Returns for Investors’ Cash
There appears to be a proliferation of companies offering huge incentives for investors’ cash in order to finance the construction of property developments. Some are as much as 30% return on capital invested per annum.
Investors entering such arrangements should be aware that generally this level of reward carries a significantly higher level of risk. Presently, I borrow at less than 5%. Why would I give 30% to an investor when the bank is willing to lend me the money at 5%? A simple question to ask these companies would be why they don’t borrow the cash through a bank, or have they failed to get bank finance and if so why?
Bank Valuations for The Palm Spa Resort, Cyprus
Last week we received the bank valuations for those clients buying at The Palm Spa Resort in Cyprus which were well in excess of the sales prices. In times when banks around the globe are becoming more risk averse this is indeed a very positive and welcome outcome for investors. If you would like information on investing in any of my developments, then please fill in the form at:
www.jet-to-let-investments.com/developments
Property Re-sales
The re-sale supplement to Jet-to-Let Magazine will be published in the next edition due to be delivered to your office or home mid-October 2008. If you wish to advertise your property in the magazine please fill in the form below:
Additionally, advertisers will receive a FREE 6 month listing on our new re-sales website.
www.jet-to-let-magazine.com/resales
Best wishes
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