Syariah-compliant London property fund launched

KUALA LUMPUR: London-based asset manager London Central Portfolio (LCP) has launched a syariah-compliant London residential property fund.

The new fund called London Central Apartments (LCA) is the first syariah-compliant fund investing in the London residential property market. This is LCP’s third fund launched in four years.

Established in 1990, LCP provides end-to-end service for private high net worth investors in prime London Central residential properties. It specialises in the Westminster, Kensington and Chelsea boroughs that make up its core prime London Central focus.

LCP CEO Naomi Heaton said the LCA fund is timed to take advantage of strong investor demands amid the continuing volatility of stock markets. It is targeting a fund value of £30-£50 million (RM148-RM246 million) from equity contribution and £20 million from syariah-compliant structured finance.

“The world’s super rich are viewing prime London residential property the same way as they do gold and there is limited supply of both. Investors buy into London for its lifestyle and accessibility but now they are looking for alternative assets that can ride out market fluctuations,” Heaton said in a statement recently.

“Since the onset of market turbulence in October 2007, prime London property has outshone the FTSE 100. The FTSE is down by 20% while London Central prices are up 10% over their pre-credit crunch high.”

Furthermore, despite the credit crisis, residential property prices in prime London Central have risen an average of 8.2% per annum over the last 15 years, according to the HM Land Registry.

LCA will build a diversified portfolio of selected and interior-designed one-and two-bedroom apartments to be managed by LCP. The manager is targeting a return of 10%-13% per annum over an investment period of five years. Returns will be generated through a combination of opportunistic buying, development uplift and capital appreciation.

According to Heaton, LCA has managed to attract first-time investors who are unable to invest directly in London property but still want a piece of the pie. “These are professionals who are priced out of investing directly in London property but wanting to get a foothold in this safe haven investment market as economic forecasts become increasingly unpredictable,” she said.

Heaton added that the gains from the fund will be subject to capital gains tax (CGT) instead of an income tax and “as non-residents are generally exempted from this, there should be no tax in the UK at all”.

LCP’s last two funds were The London Central Portfolio Property Fund in 2007 and The London Central Residential Recovery Fund in 2010.

The last annual valuation of the two previous funds in March 2011 showed a capital uplift with The London Portfolio Property Fund gaining 26% and The London Central Residential Recovery Fund gaining 20% over the initial purchase prices.

This article appeared on the Property page, The Edge Financial Daily, October 7, 2011.

Looking for properties to buy or rent? With >150,000 exclusive listings, including undervalued properties, from vetted Pro Agents, you can now easily find the right property on Malaysia's leading property portal EdgeProp! You can also get free past transacted data and use our proprietary Edge Reference Price tool, to make an informed purchase.