In this era of economic downturn more and more people are looking for new investment vehicles as traditional forms of investment leave good returns beyond reach.

Saving rates and ISA’s offer dismal returns.  The media and our government keep warning us of the shortfalls in ‘endowment plans’ and ‘pension funds’ which have been eroded by poor performances of the equity market.  The equity markets are increasingly irrational, volatile and risky.  Even banking shares, once considered  as a safe option have now lost most of their value. 

In the past few years, an ever increasing number of people have been returning to ‘bricks and mortar’ as the investment of choice.  These types of investments are easier to comprehend, to control and will always keep an intrinsic value as opposed to other forms of investments where the value can simply evaporate.  However, the experts have been warning us, for years now, about house prices levelling off and even falling.  The current crisis shows that real estate investments have to be handled with a more cautious approach than in the past. 

Although UK real estate values have dropped considerably in 2008 and 2009, prices remain relatively expensive and it is difficult to assess whether the market has bottomed out or if further price falls will be necessary.  Our opinion remains that over the long term real estate remains a good and fairly easy to understand investment product. 

Property Investments: the possibilities

          * Buy- to Let

          * Purchase Off-plan to sell at completion

          * Land investment & realisation

          * Property Development

Buy to Let: Due to still fairly high property prices it is difficult to find properties with attractive rental yields in the UK.  The added complexity of void periods, finding new tenants, maintenance and redecoration work, tenants from "hell" and management company fees, and you see that it is certainly not an easy ride.  The Buy to Let model is based mainly on the long run and aims to make a profit from capital growth.

Purchase Off-plan: Buying off-plan to resell when property is built removes the complexities of the Buy to Let investment.  Off-plan investors generate a profit from price differential between the time they buy and the time the property is ready to sell.  Here the return depends only on capital growth and the risk that the property markets do not perform as well as expected cannot be mitigated.  It is therefore essential to select off-plan investments where real demand exists.

Land investments: land can yield very good returns, however as with the stock exchange, a good level of expertise is required.  Our advice is to stay clear of schemes which invest in ‘greenbelt land’ in the hope that one day it will obtain building consent thus generating huge profits.  We have however identified several plots with signficant potential for capital growth in areas suitable for development.  We aim to maximise the profit potential of these plots by obtaining achievable planning permission for suitable development with the option to either manage the development to completion either to sell the entire project to another developer.

Property Development: we are all aware off the huge profits generated by property developers.  Unlike other investment schemes, property development does not rely on capital growth to generate profit.  However the big starting capital, the market knowledge (where to build, what to build and who to build it with) and the personal involvement required, keep the dream of becoming a property developer out of reach for most people.  Grouping investors into a syndicate removes the barriers that prevent individual investors from entering the development arena.

* DisclaimerProlan-Invest schemes are only suitable for sophisticated investors or high net worth individuals. If you are interested in taking advantage of one of our investment opportunities, please send us an email to info@prolan-invest.com and we will contact you with more details.