March 11 (Reuters) – As a symbol of Britain’s ill-advised
romance with banking and dubious foreign money, a new prime
London property investment fund is hard to beat.
The investment vehicle from asset manager London Central
Portfolio Ltd, which will commit 100 million sterling to prime
residential property, amounts to a bet that London retains
official policies that make it the corrupt rentier’s bolt-hole
To be clear, there is nothing illicit about investing in
London property, but London is what it is because of official
policy choices which are good for banking and for wealthy people
from less democratic places.
First, a quick take on the fund, which is interesting mostly
for the assumptions underlying its mode of doing business.
Citing what it says is a 40-year track record of 9 percent
annual price appreciation in central London property, the fund
plans to buy up one- and two-bedroom units, with an eye towards
renting them and then flipping them in five to seven years. If
you consider eternal 9 percent growth in property prices, even
in districts popular with Russian oligarchs, optimistic, wait
until you hear about the annual 14 to 18 percent rate of return
the fund is targeting. That figure is only therefore achievable,
of course, with a liberal dose of borrowed money.