An independent professional's take on the latest news and trends in global financial markets

Prime London property

Since May 2011 I have been a member of the investment committee of D&G Asset Management, a firm which manages a fund that invests exclusively in prime central London residential property and provides specialist advice and management services to wealthy individuals looking to acquire residential property in the prime London districts of  Chelsea, Knightsbridge and Kensington. More details at www.dngim.com.

Joining this specialist group allows me to participate in discussions and decisions about an exceptional asset class, one whose fortunes I have followed for many years. Top-of-the-market houses and flats in the poshest area of London operate in a market which is almost completely divorced from general UK economic trends. Prices and demand are set almost exclusively by overseas buyers, for which central London remains a must-have area in which to go hunting for property. No other capital city offers quite the same combination of secure tenure, cosmopolitan lifestyle, rising demand and limited supply.

This may not be all positive for the economy of London or the UK, but it has proved an exceptional investment opportunity. Returns from price central London residential property have been consistently strong for more than 25 years, outperforming almost every other mainstream asset class over that period. Small wonder that institutional investors are finally starting to look at in preference to their long term staple, commerical property, which has the attractions of higher starting yields, but poor long term capital appreciation.

Of course past performance is no guide to the future, and nobody could claim that the best London property is cheap – far from it. Equally, however, in a world of monetary debasement, I see no sign as yet of an end to the powerful forces which have made prime London housing so attractive in the eyes of foreign owners. Since few of us can afford to live in these areas any more, owning prime residential property through a fund is a useful, low cost way for investors to share in the resilience and diverisfication benefits of the asset class.

Written by Jonathan Davis

July 28, 2013 at 6:41 PM