Step 2 – investigate commercial property options
Commercial property to the uninitiated will probably mean shops, offices, industrial units or storage pods. It surprises many to find out that the biggest returning UK investment opportunities are serviced apartments and purpose built student accommodation – if they’re in the right place. You should look for a location with high rental demand and a scarcity of suitable properties.
Because developments in these sectors tend to consist of 100+ units, costs can be spread thinly across a lot of owners resulting in purchase prices which compare favourably with a buy-to-let mortgage deposit.
Remember, commercial property is just a box which earns its owner money; that’s a prospective buyer’s sole consideration when you choose to resell. If your property has a demonstrable history of regular income delivery, it will attract global interest.
Step 3 – check your safety nets
And, giving the lie to old saying, the highest-yielding apartments and student properties can also require the least risk on your part.
Some of the more enlightened developers choose to make their profit through regular rental income growth rather than via an inflated initial sale price. In these circumstances, they retain the freehold, while you receive 120-250 year leasehold ownership. You will receive an assured annual NET income of 8-12%, contracted directly with the developer who will be your tenant for the next 10 years – the highest yield in UK property for the lowest risk.
And because your developer has a vested interest in your mutual property, they will install a management team onsite 24/7 to run and maintain it, meaning not only is your income secure and sector-leading, it’s totally effortless too. Because it’s fully transferable at resale, it will be very attractive to other property investors around the world, allowing you to make as much as 40% capital growth.
James Harrington, Business Development Manager at sector specialists Emerging Property comments “Of course, there’s no such thing as a totally risk-free investment, we wouldn’t claim otherwise. But we genuinely believe that these fixed income terms provide unmatched owner security as it’s the developer who’s taking on all the risk for the 10-year period. A 10-year build warranty and onsite management provide even further reassurance, meaning our owners won’t have to pay out another penny for the duration of their contract whatever happens – no repairs, no refurbishment, no replacements, nothing.”
This article is sponsored by Emerging Property, please find more information here.
How much of a risk should you take in a property investment?
It’s a commonly-held belief that higher rewards involve higher risk, something that the instinctively risk-averse might find off-putting. But the adage isn’t strictly true, as we’ll show in this article. If you just follow a few simple steps, you can cut the risk in a property investment to the barest minimum – and reap some serious rewards.
Step 1 – stay away from residential
Some potential investors who are wary of the volatility of stocks and shares seem to think that residential property is the way to go instead – “You can’t go wrong with bricks and mortar…”
This is no longer the case.
For a start there’s the serious increase in buy-to-let problems brought about by rising house prices, legislation, licensing, Stamp Duty surcharges and a growing tax burden.
And if you’re considering a residential property as a vehicle for capital growth, this is in fact a very high-risk approach. The residential property market is hugely susceptible to external forces and you could end up with your capital locked into an asset you can’t move on without incurring a substantial loss.
An investment property needs to yield consistent income from settled, long-term tenants and there should be solid prospects for appreciable capital growth.
Step 2 – investigate commercial property options
Commercial property to the uninitiated will probably mean shops, offices, industrial units or storage pods. It surprises many to find out that the biggest returning UK investment opportunities are serviced apartments and purpose built student accommodation – if they’re in the right place. You should look for a location with high rental demand and a scarcity of suitable properties.
Because developments in these sectors tend to consist of 100+ units, costs can be spread thinly across a lot of owners resulting in purchase prices which compare favourably with a buy-to-let mortgage deposit.
Remember, commercial property is just a box which earns its owner money; that’s a prospective buyer’s sole consideration when you choose to resell. If your property has a demonstrable history of regular income delivery, it will attract global interest.
Step 3 – check your safety nets
And, giving the lie to old saying, the highest-yielding apartments and student properties can also require the least risk on your part.
Some of the more enlightened developers choose to make their profit through regular rental income growth rather than via an inflated initial sale price. In these circumstances, they retain the freehold, while you receive 120-250 year leasehold ownership. You will receive an assured annual NET income of 8-12%, contracted directly with the developer who will be your tenant for the next 10 years – the highest yield in UK property for the lowest risk.
And because your developer has a vested interest in your mutual property, they will install a management team onsite 24/7 to run and maintain it, meaning not only is your income secure and sector-leading, it’s totally effortless too. Because it’s fully transferable at resale, it will be very attractive to other property investors around the world, allowing you to make as much as 40% capital growth.
James Harrington, Business Development Manager at sector specialists Emerging Property comments “Of course, there’s no such thing as a totally risk-free investment, we wouldn’t claim otherwise. But we genuinely believe that these fixed income terms provide unmatched owner security as it’s the developer who’s taking on all the risk for the 10-year period. A 10-year build warranty and onsite management provide even further reassurance, meaning our owners won’t have to pay out another penny for the duration of their contract whatever happens – no repairs, no refurbishment, no replacements, nothing.”
This article is sponsored by Emerging Property, please find more information here.
Step 2 – investigate commercial property options
Commercial property to the uninitiated will probably mean shops, offices, industrial units or storage pods. It surprises many to find out that the biggest returning UK investment opportunities are serviced apartments and purpose built student accommodation – if they’re in the right place. You should look for a location with high rental demand and a scarcity of suitable properties.
Because developments in these sectors tend to consist of 100+ units, costs can be spread thinly across a lot of owners resulting in purchase prices which compare favourably with a buy-to-let mortgage deposit.
Remember, commercial property is just a box which earns its owner money; that’s a prospective buyer’s sole consideration when you choose to resell. If your property has a demonstrable history of regular income delivery, it will attract global interest.
Step 3 – check your safety nets
And, giving the lie to old saying, the highest-yielding apartments and student properties can also require the least risk on your part.
Some of the more enlightened developers choose to make their profit through regular rental income growth rather than via an inflated initial sale price. In these circumstances, they retain the freehold, while you receive 120-250 year leasehold ownership. You will receive an assured annual NET income of 8-12%, contracted directly with the developer who will be your tenant for the next 10 years – the highest yield in UK property for the lowest risk.
And because your developer has a vested interest in your mutual property, they will install a management team onsite 24/7 to run and maintain it, meaning not only is your income secure and sector-leading, it’s totally effortless too. Because it’s fully transferable at resale, it will be very attractive to other property investors around the world, allowing you to make as much as 40% capital growth.
James Harrington, Business Development Manager at sector specialists Emerging Property comments “Of course, there’s no such thing as a totally risk-free investment, we wouldn’t claim otherwise. But we genuinely believe that these fixed income terms provide unmatched owner security as it’s the developer who’s taking on all the risk for the 10-year period. A 10-year build warranty and onsite management provide even further reassurance, meaning our owners won’t have to pay out another penny for the duration of their contract whatever happens – no repairs, no refurbishment, no replacements, nothing.”
This article is sponsored by Emerging Property, please find more information here.
European shares continue sell off, driven by US weakness
Shares in Europe continued their decline on Friday morning following continued weakness in major US equity indices.
Investors hoping for some reassurance from central banks were severely disappointed as the Bank of England Governor, Mark Carney, suggested that rates would rise sooner than the market had been pricing in and the Fed’s Dudley said recent stock market declines were ‘small potatoes’.
“The little decline that we’ve had in the equity market today has virtually no implications for the economic outlook,” said New York Fed President William Dudley.
The FTSE 100 was hovering around 7100 at midday in London on Friday and the German Dax touched 12001.
The FTSE 100 is now roughly 10% off the recent high, a level that is classed as a ‘correction’. A bear market is categorised as a 20% drop from a market top.
The FTSE 100 was hovering around 7100 at midday in London on Friday and the German Dax touched 12001.
The FTSE 100 is now roughly 10% off the recent high, a level that is classed as a ‘correction’. A bear market is categorised as a 20% drop from a market top. Bank of England unanimous on 0.5% interest rate
The Bank of England’s monetary policy committee voted unanimously to keep the key interest rate at 0.5% at their latest meeting, despite rumours of a possible rate hike.
The FTSE 100 sunk in anticipation of the news, before picking up slightly in the wake of the announcement. Whilst all members of the committee voted to keep rates at the current level this month, they did say a rate rise could be on the cards sooner than previously expected.
The minutes said rates were likely to rise “earlier” and by a “somewhat greater extent” than they thought at their last review in November. There is speculation that the next rate rise could come as soon as May.
Michael Metcalfe, global head of macro strategy at State Street Global Markets, commented: “Markets had moved quickly this year to discount more tightening from the BoE. The hawkish tilt of this meeting will at the very least, vindicate these moves and possibly encourage further expectations. What will be key now is to watch how sterling responds, as a much quicker appreciation could produce a faster fall in inflation and potentially nullify the need for a more rapid tightening cycle.”
Thomas Cook shares fall despite a “good start” to the year
Travel operator Thomas Cook (LON:TCG) has “got the year off to a good start”, seeing a 7 percent revenue rise in the first quarter of the year.
Seasonal underlying operating loss improved by £10 million to £42 million, with its full year outlook remaining in line with expectations. Gross profit increased by £16 million to £376 million, despite a 50 basis point fall in gross margin to gross 21.5 percent due to higher hotel prices in Spain and fewer long haul sales.
The group said: “From all that we see so far, customers’ appetite for a summer holiday abroad shows no sign of slowing down. We’ve taken early action to meet strong demand for destinations in the Eastern Mediterranean. This has enabled us to shift capacity out of the Spanish islands where we have seen a continuation of the margin pressures we experienced last summer.”
The group’s own airline also saw an improvement in performance, reporting an underlying loss of £13 million – an improvement of £9 million.
Peter Fankhauser, chief executive of Thomas Cook, said:
“This remains a highly competitive – and, at times, unpredictable – market, as the disruption in the airlines sector in recent months demonstrates. However, based on current trading and the continued progress we are making on implementing our customer-focused strategy for profitable growth, we expect to deliver a performance in line with current expectations for the full year.”
Shares in Thomas Cook are currently trading down 2.87 percent on the news, at 121.70 (0846GMT).
Ashmore Group report 18pc growth in assets under management, but profits fall
Investment manager Ashmore Group (LON:ASHM) reported an 18 percent growth in assets under management on Thursday, boosted by strong performance across the emerging markets.
The group reported net inflows of $7.9 billion over the six months to the 31st December, and positive market performance of $3.2 billion.
Profit before tax fell by 18.5 percent to £99 million, leading diluted earnings per share to sink 19 percent. However, net inflows investment processes continued to deliver strong investment performance, with 82 percent of AuM outperforming benchmarks over one year, 93 percent over three years and 87 percent over five years.
“The favourable environment for Emerging Markets is reflected in Ashmore’s solid operating performance during the period,” said chief executive Mark Coombs.
“We expect another good year of performance across the range of Emerging Markets asset classes in 2018, as economic conditions continue to be supportive, valuations remain attractive, and therefore investors continue to increase allocations.”
Shares in Ashmore Group are currently down 0.67 percent at 417.20 (0938GMT).
Compass shares jump 5pc on strong organic revenues
Compass Group (LON:CPG) shares jumped 5 percent on Thursday, after reporting organic revenue growth for the first three months to 31 December of 5.9 percent.
The strongest region for the period was North America, which saw an 8.2 percent increase in organic revenue, boosted by a particularly strong performance in the Healthcare & Seniors, Vending and Sports & Leisure sectors.
Europe saw revenue growth of 2.1 percent, with organic revenue across the Rest of the World up 4 percent.
The hospitality group did note that currency movements were likely to have a negative effect over the remainder of the year, with foreign exchange translation likely to negatively impact 2017 revenue by £1.2 billion and operating profit by £97 million if current spot rates continue for the rest of the year.
Looking forward, Compass said its outlook for 2018 is “positive”, and that, in the longer term, it “remains excited about the significant structural growth opportunities globally and the potential for further revenue and margin growth.”
On The Beach report 23pc revenue jump
Beach holiday retailer On The Beach saw revenue rise 23 percent in the three months to the end of January, boosted by both core business and its sunshine.co.uk acquisition.
The group said it had continued to “perform well” over the period, despite price increases in the market year-on-year for winter departures due to the failure of Monarch Airlines.
However, the group said summer 2018 seat prices would remain broadly flat, with other carriers adding incremental capacity from Easter 2018 onwards.
“These pricing factors, together with a return of customer demand for destinations in the Eastern Mediterranean, are helping to drive strong bookings growth for summer 2018 departures,” the group said.
Simon Cooper, Chief Executive of On the Beach Group plc, commented:
“The first four months of the new financial year has delivered another solid period of growth for the On the Beach, Sunshine and ebeach brands. Our strategy of investing in our brands, talent and technology to drive growth has delivered performance in line with the Board’s expectations, with consumers attracted to our wide range of value for money beach holidays. The Board remains confident in the Group’s outlook and will continue to evaluate opportunities to enhance its market share position.”
On The Beach (LON:OTB) shares are currently trading up 0.40 percent at 503.00 (0818GMT).
FTSE 100 bounces back after market rout
The FTSE 100 rallied on Tuesday following a sharp selloff on Tuesday that wiped billions from the value of stocks listed in London.
The move higher came after a similar reversal late on Wall Street on Tuesday evening which saw heavy losses pared going into the close.
Despite today’s relief rally, some market participants were still questioning whether the reversal was sustainable.
“Certainly there is a risk that yesterday’s rally is a fake out before another selloff”, said Neil Wilson, senior market analysts at ETX Capital to Reuters.
Scottish Mortgage Investment Trust (SMT:LON) was the biggest riser in London on Wednesday as it reversed strong losses from yesterday.
Precious metals miners Fresnillo and Randgold Resources were the weakest shares in London’s leading index as gold declined following risk-aversion price jumps earlier in the week.
Despite today’s relief rally, some market participants were still questioning whether the reversal was sustainable.
“Certainly there is a risk that yesterday’s rally is a fake out before another selloff”, said Neil Wilson, senior market analysts at ETX Capital to Reuters.
Scottish Mortgage Investment Trust (SMT:LON) was the biggest riser in London on Wednesday as it reversed strong losses from yesterday.
Precious metals miners Fresnillo and Randgold Resources were the weakest shares in London’s leading index as gold declined following risk-aversion price jumps earlier in the week. Rio Tinto posts record margins alongside share buy-back
Rio Tinto (RIO:LON) announced the highest EBITDA margin for ten years helped by a jump in earnings.
The diversified miner also released details of a $1 billion share buy-back, a welcome return to shareholder which comes in addition to a full year dividend of 290 cents per share.
Rio Tinto have been helped by an upswing in commodity prices as demand for China remains robust and the global economic recovery stays on track.
“Today we have announced a strong set of results with operating cash flow of $13.9 billion, a record full year dividend of $5.2 billion and an additional $1 billion share buy-back. This brings total cash returns to shareholders to $9.7 billion declared for 2017.
“The strength of our cash flow is a result of resilient prices during the year coupled with a robust operational performance and a focus on mine to market productivity.
“Our strong balance sheet, world-class assets and disciplined allocation of capital puts us in the unique position of being able to invest in high-value growth through the cycle, and consistently deliver superior cash returns to shareholders.”
“Today we have announced a strong set of results with operating cash flow of $13.9 billion, a record full year dividend of $5.2 billion and an additional $1 billion share buy-back. This brings total cash returns to shareholders to $9.7 billion declared for 2017.
“The strength of our cash flow is a result of resilient prices during the year coupled with a robust operational performance and a focus on mine to market productivity.
“Our strong balance sheet, world-class assets and disciplined allocation of capital puts us in the unique position of being able to invest in high-value growth through the cycle, and consistently deliver superior cash returns to shareholders.” Hargreaves Lansdown report strong figures and client growth in 2017
Hargreaves Lansdown (LON:HL) reported strong figures for the six months to the end of 2017, with pre-tax profits benefitting from an increase in client numbers.
Assets under administration rose 9 percent over the period to £86.1 billion, with pre-tax profits rising 12 percent to £146.9 million.
Net new business hit £3.34 billion during the period, up 43 percent compared to the same period a year ago. The group added 61,000 new clients over the period, to mark a total of 1,015,000 active clients since 30 June 2017.
Diluted earnings per share rose 12 percent to 25 pence during the six month period, with interim dividend per share up 17 percent to 10.1 pence.
“I’m pleased to report another strong period of growth for Hargreaves Lansdown for client numbers, revenue and profit. We have a significant market opportunity with a clear strategy focused on our clients’ needs and offering great value and service to them,” said Chris Hill, Chief Executive Officer.
“Our aim of making it easy and efficient for clients to manage their savings and investments in a secure environment and empowering them to save and invest with confidence is at the heart of our business, and was reflected in our continued growth during the first half of our 2018 financial year.”
Hargreaves Lansdown shares are currently trading down 1.61 percent at 1,802.00 (0907GMT), largely as a result of the global share sell-off which took place this morning.