Are real estate developers disadvantaged relative to property fund investors?

Most
real assets are performing better than the volatile stock market. But
for some, property funds hold greater attraction over developed real
estate.

Since the financial crisis of 2008, investors
have soured on traditional investments due to factors of poor
performance. Instead, they’re turning toward alternatives that include
land investments and property funds. The reasons for this are easily
understood: The growing housing shortage in the UK portends good near-
and mid-term value growth for all aspects of residential real estate,
particularly in light of robust (7 per cent since 2001) population
growth.

Of course, not all real estate is the same for
investors. Within real estate are two distinctly different types of
investments, built properties and raw land. Some investors choose built
properties or to invest in the developer who is managing the
construction and sale of homes and commercial structures. An option to
that is raw land, ripe for plan rezoning from, say, agricultural to
residential-designated land.

Both have their merits, of course. But land investment might hold the advantage for at least three reasons:

To be sure,
both investors in property funds and land investments tend to achieve
asset growth in well-managed situations. But from land to property
development, the path is quicker. With a seasoned team of land
investment professionals, a joint venture partnership can identify and
manage properties for maximum value appreciation and resale between 18
months and five years after acquisition.

All investments carry
risk and should be considered in relation to one’s full portfolio of
financial instruments. Be sure to contact a personal financial
consultant before embarking on any investment.