Safe as houses

Investing in London property is seen by many as a safe haven. And with prices set to rise by 22 per cent by 2016, one private bank wants to ensure your money is well placed

Residential property has many characteristics that make it a strong asset class over and above more traditional asset classes.

Real estate is a tangible and personal asset and buyers tend to have a strong emotional connection with it; this is particularly prevalent when refurbishments have taken place. Furthermore, property is easy to value and unlike some asset classes where it is either capital growth or yield that is obtained, property can generate both, providing a distinct advantage.

Location is key to ensuring that the investment provides a strong source of capital appreciation. Alpa Bhakta, head of property finance at Butterfield Private Bank, has been lending to high net-worth individuals buying prime central London property over the past decade.

“We have been able to help a number of wealthy individuals secure large mortgages from £1m to £10m for investments in central London which many deem as a ‘safe haven’,” says Bhakta.

This is supported by the latest figures from the Land Registry, which show house prices across the Royal Borough of Kensington and Chelsea rising by 10.4 per cent last year, whereas UK-wide they fell 2.1 per cent.

Bhakta believes there are excellent growth prospects over the next few years, backed by research from Savills that shows prime central London property prices are set to increase 22.7 per cent by 2016. This indicates that top London real estate is an asset class where you can make a good return on equity in the current economic climate.

While residential property offers some diversification possibilities, it is still important to ensure your assets are balanced – and if all your assets are in property then it is prudent to identify the key time to divest into other liquid assets. At Butterfield Private Bank, investment specialists work to tailor the requirements of high net-worth individuals to their specific needs, advising on a diverse range of investment strategies dependent on risk appetite.

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