Whilst many investors place great emphasis on the stock market, the commercial and residential property sectors have traditionally been favourites amongst those seeking stable, long-term investments. Investment markets worldwide, many identified as the key indicators, report estimated real estate investment is consistently greater than the value of stock market equity investment.
Stock markets can offer several advantages, including easy access, significant short-term gains and a high level of liquidity. However, real estate offers lower volatility than the stock market and less correlation with other asset investment performance in general.
Real estate investments can therefore augment portfolios of stocks and bonds by diversification with the added security of a tangible ‘bricks & mortar’ asset.
Volatility and correlation exist in every investment, but the amounts vary by investment class, type, and by market. Their differences illustrate the advantages and disadvantages of each market class and can present enormous challenges in any investment evaluation process.
Degrees of volatility can be reduced with a diversified portfolio. In the event of a poor performance in a given market, investments will have a lower risk of loss if they have little correlation with one another by region, market or asset class.
Property syndication structures can offer a number of advantages for investors seeking to diversify their portfolios or perhaps divest of stocks and/or bonds as part of an investment strategy.
Syndicated property investment is a vehicle for funding multiple acquisitions of residential and commercial property. A syndicate is typically made up of like-minded investors who, individually, would not have sufficient capital to invest in multi-layered property structures. By merging resources, the syndicate can acquire a greatly enhanced diversified property portfolio, generating regular income and significant capital growth potential.
Diversification and security of property investment can be further enhanced by sector (residential, commercial, office, industrial) and/or by region (UK, EU etc.).
Investors often have the misconception that their money will be tied up until the syndicate fund matures (usually a 5-year term). The reality is many syndicate administrators permit investors to sell their stake should they wish to exit the scheme prior to the maturity date.
Property syndication therefore combines the benefits of investing in the stock market with the strength and security of property ownership.
INVESTMENT SYNERGY – HELPING TO SAFELY NAVIGATE TROUBLED FINANCIAL WATERS
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