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What are Property Investments?

In most cases this means commercial property (such as shopping centres and office blocks) rather than residential property, however on a smaller scale you can look to hold residential property both as your main residence and / or buy to lets.

Types of property investment

You can invest in property in various ways, the most common are direct holdings such as your main residence or investing via an investment company in a property fund.

The role of property in a portfolio

Property has features of both equities and bonds - it can generate income, like bonds, via the rental income and it also provides the opportunity for capital growth, like equities. Commercial property works well as part of diversified portfolio as it doesn’t react in the same way as bonds and equities to changing economic conditions, so the addition of commercial property as an asset class can help to create a well rounded portfolio.

Benefits

• Potential for higher returns over the long term
• Provide income through rental payments
• Provide potential for capital growth

Drawbacks

• No capital guarantee
• Value can fluctuate
• Illiquid asset

 

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