The once red-hot UK property market has cooled a bit. As Brexit fears persist, London property prices have declined dramatically from their peak more than a year ago. Headlines have done little to assuage concerns with one recent publication claiming housing sales are facing the worst forecast in many years.
Of course, one sector’s struggles may lead to another’s gain. Property crowdfunding platform, Property Partner, sees a silver lining in the gloom.
Announced today, Property Partner is now offering their first “Opportunistic Fund.” This Fund seeks to move quickly to pursue opportunities created by sellers who are “under significant pressure.” The company believes that experienced investors can benefit from the shifting dynamics in the UK property market.
“The opportunistic fund will enable Property Partner to move fast as a cash buyer on properties where vendors are highly
motivated to sell,” says Robert Weaver, Chief Investment Officer of Property Partner. “Very often these are receivership sales or properties where debt costs have extinguished developer returns. We are seeing more and more of these opportunities through our network as the market softens and demand from mainstream investors is increasingly constrained by the current climate of political and economic uncertainty.”
Property Partner’s strategy is to purchase property assets at a discount to valuation during the current period of “high investment uncertainty.”
More specifically, Property Partner is targeting UK residential and student accommodation blocks in lot sizes between £500,000 to £2 million. The company says the Fund will also seek opportunities to unlock and add value by employing in-house asset management expertise, undertaking improvement work or overcoming practical and legal obstacles beyond the scope and skillset of most individual investors.
The Opportunistic Fund hopes to drive a total net return of 10% annually over a term of 18 months. Property Partner explains:
“All acquisitions will have a clear and achievable exit plan, including target sale price and timeline. Debt may be raised against properties acquired to amplify returns where appropriate, potentially to acquire additional properties within the fund or finance improvement work. We will only acquire properties where we are confident that our investment plan will deliver a net total return of at least 10% p.a. to investors.”
Shares in the fund will be tradeable on Property Partner’s secondary marketplace during the term.
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