Property as an asset class can offer great diversification benefits as part of your portfolio. Doctors can invest in commercial property in all of the usual tax efficient wrappers like ISAs, pensions and investment bonds with the lowest risk, most diversified option usually via collective investment funds like unit trusts.
So what are the advantages of investing in property?
Property is a physical asset - you are investing in bricks and mortar
Property can offer a relatively stable income return
There is potential for capital growth
Property offers great diversification benefits to the usual asset classes like shares and bonds.
Investing in property offers the potential for inflation protection
What are the advantages of investing in property in unit trusts?
You can invest smaller amounts
You get diversification across many different properties all within the same unit trust
Benefit from property expertise and on-going management responsibility
What are the drivers of property returns?
Investment returns are created from potential capital appreciation and cash flow from rent. Capital value changes are usually dictated by the market and through active fund management. Cash flows are usually determined by the lease structure and the terms between the owner and occupier.
What are the risks of commercial property investment?
Specific property risks include the quality of tenant, valuations not being guaranteed, lack of liquidity and local environmental risk.
General property market risks include sector and geographic risk, the lack of availability and cost of debt in the property market and lack of investor confidence.
More macro economic risks might involve poor economic outlook, changes to regulation and legislation, interest rate changes and perhaps currency if investing in property abroad.
For an overall review of your portfolio and whether some commercial property is right for you then please get in touch on firstname.lastname@example.org or telephone 0117 966 5699.