In the year leading up to 1st July 2014, West One found that private investors in short-term secured loans had seen a total annual return of 10.5 per cent.
Those who invested £500,000 in bridging loans on 1st July 2013 would now see their investment worth £552,000 while the same investment in fine art would have gained approximately half as much value, to reach £526,500 by 1st July 2014, according to the short term lender.
Duncan Kreeger, Director at West One Loans, comments: “Economic recovery is strengthening across the developed world, led by the UK. So alternative investments are no longer a question of finding havens. Growth is on the agenda – and investors are on the hunt for ways to get involved.
“Property now has an enormous capacity for growth, to overcome a particularly sharp downturn and make up for the ground lost over the last five years. But while developers are in no way short of projects, finance is the tightening bottleneck to further progress.
“For those private investors who can offer assistance, this is presenting enormous opportunities. Bridging loans can give individuals and smaller institutions access to the property lending market – previously dominated by increasingly cautious large banks.”
|
|
Total Return |
Volatility |
Current value of £500,000 |
|
Bridging Loan Investments |
10.5% |
0.03% |
£552,500 |
|
Fine Art |
5.3% |
1.7% |
£526,500 |
|
Gold |
-1.6% |
10.2% |
£492,000 |
|
Fine Wine |
-16.5% |
1.6% |
£417,500 |
When compared by volatility, bridging was found to be favoured for stability of returns, with a three month standard deviation of 0.03 per cent for property bridging loans.
Duncan concludes: “Sophisticated investors are looking to alternative assets as a new way to navigate risk and return, spreading their capital between a greater variety of asset classes.
“But alternatives are also about new ways of linking the investor to the asset. For example, physical gold or art works are an excellent way to hedge against more mainstream markets – but the ownership and investment structures are not particularly revolutionary.
“By contrast, short-term property loans from individuals to developers have a similar level of liquidity as many physical assets, but allow more imaginative links with profitable projects.”
Leave a comment