As early as December last year, Assetz reported that seasoned, bulk investors were returning to the market, as distressed property prices showed superb value when measured on rental returns. However, it took until the beginning of summer 2009 for the first major wave of new investors to enter the fray, as many people, disillusioned with poor savings rates and large losses on other investments, attempted to capitalise on remaining property bargains.
This sudden influx of cash-rich investors into the market has resulted in some measurable decreases in the discounts achievable at property auctions.
Stuart Law, Chief Executive of Asset, comments:
“At the end of 2008, large-scale, professional, cash-rich investors recognised that distressed property prices had reached their lowest point. However, the majority of consumers were more cautious about the direction of the market.
“A lot of new investors, who have never invested in residential property before, are now entering the market with large deposits, as a result of the likes of Nationwide recording sustained house price growth. Significant comfort is being taken from the relative strength of the residential property market versus other asset classes, as houses prices show continued improvement. The FTSE 100 is no higher than it was in September 1997 and was recently around 50% off its peak. Many other investments have suffered very badly and we are seeing cash rich investors taking matters into their own hands.
“Investors coming into the property market see it as a safer option. Elsewhere, savings are inadequately protected, companies can stop paying dividends and shares can become worthless overnight. Residential property on the other hand will generally produce a reasonable income from rent and always has an intrinsic value."
However, not all investors new to the property market feel comfortable owning bricks and mortar directly. Over the last month Assetz has seen an unprecedented level of interest in its new UK Residential Recovery Fund, as financial advisers and their clients, both in the UK and abroad, look at the most effective way to gain exposure to the UK residential market, through highly discounted distressed sales sourced by a highly experienced large-scale organisation.
Property funds help smaller investors gain access to the wider market, acquiring a diverse range of carefully selected, high quality property from distressed sellers, including keenly priced new build homes and stock being cleared by banks and LPA receivers.
