You read the headlines – yet another trophy property in the city of London has been sold to a billionaire oligarch/banker/businessman, take your pick; for sums that most of us can’t even comprehend. The article piques your interest, but its contents leave you downcast as your own comparative financial position becomes blatantly obvious.
In the past four months alone, two properties, 6 St. James Square and 30 St. Mary Axe, the landmark popularly referred to as the Gherkin, sold for a cumulative total of a snippet under £1 billion. And what makes this apparently even more astounding is that these buildings were not bought by property trusts or institutional investment funds but rather by individuals – Spanish billionaire, Amancio Ortega and Brazilian billionaire, Joseph Safra. Safra paid £725 million for the Gherkin dwarfing the £265 million paid by Ortega.
I Like To Watch
Most of us, if not all of us, are voyeurs to a lesser or greater extent. This is part of the reason behind the success of reality television and programmes that take us inside the lives of the rich and famous. We dream for many reasons; be it because the grass is always greener, or because if we don’t have dreams, however big or small, would it be worth getting out of bed in the morning?
Most of us dream of some form of financial success. Money may not be able to buy love or happiness but it sure doesn’t hurt either. Decades ago, working a regular job used to be sufficient for you to afford to provide your family a standard of living that may not have deemed you wealthy, but was enough to get by comfortably and still save for a rainy day – and that was from one income. These days, except for the privileged few, that is a near impossibility – even from two incomes.
The reasons are myriad – economic policies geared toward those who are already wealthy, the preponderance of easy money that renders your savings a liability rather than an asset as they sit earning either a negative real interest rate or negative absolute interest rate, and technology that makes the world a smaller place and promotes excessive spending; even of the money we don’t have. The world sure has come a long way in half a century, and not necessarily for the better.
Data compiled from the Nationwide Building Society House Price Index Series and from the Office of National Statistics websites shows that, since 1975, house prices have increased, on average, by 7.5% per year and by 1.9% per year above inflation. In the period 1975-2014, real house prices in the UK increased 126%. The data suggests that the largest outlay most people ever make, for their home, only keeps on appreciating.
However, it is always easy to point the finger at others rather than take the responsibility for our own fate. Sure we can blame the government or our employer or the “system,” but it is incumbent upon ourselves to see how we can best excel given our talents and the hand we have been dealt in life. We must observe, read the lie of the land, see what the successful are doing and try to emulate them if we aspire to reach similar financial heights. Impossible? The word “impossible” should not exist in your vocabulary unless it is used in its correct form – I’m possible!
Property is the Answer
Look at any successful businessperson and they will have a property portfolio. They realise that property is an integral part of their wealth storage and creation for very good reason. Property is a long-term store of wealth. During times of deflation and low interest rates, the price of property appreciates as the market is underpinned by those low interest rates. When rates rise, usually due to inflationary pressures, there are usually clauses in the lease to account for inflation, so your rental income should remain at least steady and maintain its real purchasing power. Property, unlike paper money, cannot be created with the click of a computer mouse. And the last time I checked, land wasn’t being manufactured any more either.
Yields on property have fallen in recent years as property prices have appreciated, however they still handily beat the interest rates offered on bank deposits. Also, a property, if properly funded and managed, can offer you visibility and stability; something that may not necessarily be the case with some of the banks, given their exposure to off balance sheet “assets,” and derivatives that nobody can accurately quantify…until it’s too late. And you only have to look as far as Cyprus to see how quickly your savings can be “tied up.”
If I Were a Rich Man
Fine, you understand how important property is for your financial health; however, you aren’t an Ortega or Safra, and probably never will be. That’s no excuse though for not having exposure to London property, just like these financial giants. “But how?” you ask yourself; it’s impossible! There’s that word again.
Sure you may not be as wealthy as the billionaire buying London trophy properties but that doesn’t mean that you can’t participate in the London property market. Yes, I can hear your words, “How can I buy London property when I don’t even have the money for the deposit, let alone the ability to arrange finance or manage the property.” And that’s where Cogress enters the picture.
With as little as £20,000, anyone can be an equity holder in London properties located in prime locations. Cogress has been successfully involved in the purchase, renovation and management of properties in the US, Israel and London. Numerous investors have made above market returns , with a recent project in Golders Green achieving an annual return of 25.07%.
You may never be a Rockefeller, but that doesn’t mean that you should relinquish your dream of living comfortably and using property investment to help achieve that dream. The great Chinese philosopher, Lao Tzu, stated, “The journey of a thousand miles begins with one step.” Perhaps the time has come to take your financial future into your own hands and take that first step.