123ArticleOnline Logo
Welcome to 123ArticleOnline.com!

ALL >> Investing---Finance >> View Article

How Property Fund Investors Can Fare Better Than Real Estate Developers

By Author: Chris Westerman
Total Articles: 133

Are real estate developers disadvantaged relative to property fund investors?


Most real assets are performing better than the volatile stock market. But for some, property funds hold greater attraction over developed real estate.


Since the financial crisis of 2008, investors have soured on traditional investments due to factors of poor performance. Instead, they’re turning toward alternatives that include land investments and property funds. The reasons for this are easily understood: The growing housing shortage in the UK portends good near- and mid-term value growth for all aspects of residential real estate, particularly in light of robust (7 per cent since 2001) population growth.


Of course, not all real estate is the same for investors. Within real estate are two distinctly different types of investments, built properties and raw land. Some investors choose built properties or to invest in the developer who is managing the construction and sale of homes and commercial structures. An option to that is raw land, ripe for plan rezoning from, say, agricultural to residential-designated land.


Both have their merits, of course. But land investment might hold the advantage for at least three reasons:

Adaptability to market needs – Raw land can be converted (pending approval of Local Planning Authority approvals, of course) to the use that is most critical to the local economy. This flexibility allows the land investment fund to prepare parcels for what will be needed in a relatively short period of time. On already-built property, investors have only what is there unless circumstances allow for the extraordinary expense of demolition and rebuilding – which only rarely makes sense from an asset growth perspective.

Less investment in development (and associated risks) – The boom-bust cycles of the past several decades remind us of how a billion Pounds can be squandered rather quickly when a large property comes online at the precise moment when no one wants it. See “Canary Wharf, Olympia & York” for a spectacular illustration of how badly property investments can fail.

More liquidity (but still not volatile) – Perhaps the Achilles Heel of real land assets is the illiquidity of land, with or without property. But land investments that at most involve the light infrastructure required of residential neighbourhoods (roads, sewers and other utilities) are much more easily sold than property involving structures. While that pales in comparison to real estate investment trusts for liquidity, real property is not nearly as subject to market fluctuations as are REITs.

To be sure, both investors in property funds and land investments tend to achieve asset growth in well-managed situations. But from land to property development, the path is quicker. With a seasoned team of land investment professionals, a joint venture partnership can identify and manage properties for maximum value appreciation and resale between 18 months and five years after acquisition.


All investments carry risk and should be considered in relation to one’s full portfolio of financial instruments. Be sure to contact a personal financial consultant before embarking on any investment.

Total Views: 91Word Count: 492See All articles From Author

Investing / Finance Articles

1. Gwadar – The Opportunity Is Now.
Author: China Pak Hills

2. Dangerous Myths About The Forex Market
Author: Then Divan

3. Smart Ways To Prepare For The Tax Season
Author: John Panayis

4. Tax Tips For Teachers 2018
Author: Lauri Pitcher, CPA

5. Quick Same Day Loans
Author: John

6. How Does The Asian Trading Session Operate?
Author: Viet Son

7. 5 Most Popular Types Of Mutual Funds
Author: Vikas Malhotra

8. Benefits Of Initiating Wire Transfer From Usa To India
Author: Jack

9. 5 Tips To Keep In Mind When Using The Emi Calculators
Author: Chintu Yadav

10. Commodity Trading For Beginners – A Descriptive Guide
Author: Sophia Mason

11. 3 Tips To Improve One’s Trading Performance
Author: Amir Milan

12. With Fx Seminars A Beginner Can Easily Mastery On Forex
Author: Joyce Shen

13. Currency Trading – How It Will Be Simplified
Author: Joyce Shen

14. How Can You Get Home Loan From State Bank Of India
Author: Loansninsurances

15. Secure Your Privacy 100% From Future Data Breaches Like Equifax
Author: Judith Neely

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: