Consequences of the Crisis

The world is still reeling from the effects, of the Global Financial Crisis (GFC) 2007/08, which saw political upheaval, low economic growth, and changes in investor behaviour. The crisis unleashed chaos as many saw their jobs disappear, and their investments in the equity market vanish.

Despite this, it paved the way for a series of financial reforms to ensure that the mistakes that had been made would not be repeated. One consequence of the GFC is that an increasing number of investors have been turning their attention to real assets, which can be broadly defined as real estate and infrastructure investments.

Included under the real assets umbrella are residential, industrial, commercial, energy and various other tangible assets. As for investment vehicles that can be used to access such investments, direct and indirect investments and debt and equity, including private equity are fondly utilised.

Historically, real assets have tended to be more stable than financial assets, especially during turbulent times. They offer reliable, long-term returns and can provide protection against inflation and fluctuating currencies due to their relatively low correlation with financial assets.

And unlike financial assets such as stock and bonds, which are based on a contractual claim, they have intrinsic value.

Especially now, during this prolonged period of global uncertainty, investors like the potential for steady, predictable income that real assets can provide, as well as the diversification they can bring to their portfolios.

The UK’s impending divorce from the EU and its projected impact is subduing in intensity from initial claims, and post-Brexit it’s reasonable to expect the market to bounce back. As Mark Ivimy, Business Development Director, Prinvest UK, comments:“Once Brexit concludes, in whatever fashion it takes, the fundamentals of the property cycle – supply and demand – will continue to work unabated, with low levels of stock continuing to support house price growth.”

Research indicates that Brexit has affected the mass market through both supply-side impacts (such as increased costs for building materials and labour shortages) and demand-side issues (including stagnated real wage growth and affordability constraints).

In any market, the balance of demand and supply will determine whether prices rise or fall. With ongoing uncertainty impacting the level of new property development but demand for the right kind of properties remaining high, there are clearly opportunities for the savvy investor.

Several elements are key to successful property investment in the current environment:

  • A deep understanding of local markets to identify hotspots and undervalued development opportunities
  • Rigorous analysis of costs, risks and saleability
  • Careful management of projects to ensure timely completion

At CCG we have built a refined property development investment model around these factors, giving high net worth or sophisticated investors the opportunity to invest in high-value, high-end developments that have been carefully chosen to address specific, localised demand.

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