Investing in property: an overview

How does it work?

 ‘Buy to let’ versus ‘property investment funds’
If you’ve been thinking about investing in property you may have considered entering the buy to let market. The house price boom of 2003 saw average prices rising by more than 20% in a single year, leading to annual returns of over 10% in some parts of the country, but in recent years, growth has slowed making the market a less attractive option. In the wake of this volatile market, many people are looking at how to invest in property investment funds.

Property Investment Funds

As with a buy to let investment you make profit through rental income and an increase in the value of the property. The difference is that you don’t buy a property, so you cut out all the house-buying fees, and you spread your investments over a number of commercial properties, and depending on the kind of fund you have, over a number of countries. This reduced the risk of over-exposure that one can face with a residential property.


How does it work?

With a property investment fund you have two main options; you either put your money into commercial properties, such as offices, factories and warehouses, or you invest in the companies doing the building work. Unlike residential properties, commercial buildings have longer rental leases, meaning you face the problem of rental void less often, and furthermore they have ‘upwards only’ rental reviews built in.


Fidelity Global Property Fund

This new fund, which was launched in January, invests in the stocks of companies engaged in the real estate business around the world. The kind of properties it invests in range from offices and factories to hotels, industrial outlets and houses. You can start investing for £50 per month and the fund has potential annual returns of between 7% and 9%.


Scottish Widows Investment Partnership

SWIP launched its Property Trust in November 2004 and saw high unit returns within twelve months. It invests in mainly commercial properties such as offices