Property Funds Are Dead

Brett Alegre-Wood
November 18, 2020

headlines can be deceiving, property funds aren't dead

The reality is property funds are here, they're here to stay they're actually going to get even bigger because of build to rent etc.

Property funds are dead! Look guys do I believe property funds are dead?

Do I believe property funds are dead? This says UK unfrozen property funds, see more than £300 million in October outflows.

Basically what they're talking about is property funds which is where you pay money into a pension you know and then that pension invests into a property fund that buys property and works it that way. The question is you know are these things dead?

Well you know what I put that headline there and I'll be using that headline for a little while now, because it seems every change that happens to buy to let people say oh buy to let dead. Well I've been hearing this for 20 years, you know in fact I've been hearing this back in Australia. I've been hearing that you know investment properties are dead,  it's the same headline, it's just headline grabbing.

The reality is property funds are here, they're here to stay they're actually going to get even bigger because with build to rent and things like that these sort of schemes. They've got £300 million but actually if you look at the billions that is invested £300 million is like you know not even worth even worrying about. 

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It's a very different market in Scotland, it's a smaller market. There's some fundamental changes namely oil and gas with all the issues there and that I know Aberdeen and a few of those places house prices have dropped considerably. So, it depends on how that's reacted.

So you know I think this is where headlines can be deceiving. Property funds aren't dead, buy to let isn't dead, you know yes right now lots of things are struggling to make the returns they were. If you look at over a long period of time I mean over my whole career we've gone from where you could earn 15% 10 to 15 percent and that was kind of the accepted norm. Down to sort of where you've got you know 5% to 8% percent down to where now you sort of could be looking at you know 3% to 5% is what you'd be expecting. 

That's the long-term trend then we're heading to where actually you know virtually our growth will be smaller and it's been squeezed. It's interesting but if you look at the way back I showed you the money supply thing and had nine different if you look since 1960 there've been nine recessions. Those nine recessions happen on average every 6.6 years. That means recessions are happening more often but they're not as bad. 

The thing with a recession and what I've found being through three of them now okay is that they're really bad if you lose your job, if your business falls over, if you do that. They're inconvenient for most other people but then some people boom in a recession. It's not a case where these recessions are the worst thing on the market, actually we talk about zigzag, we talk about contrarian theory, we talk about you know when everyone's doing this you do this. So you've got to find the opportunity now.

I think that's one of the key things you know is where are the opportunities now? If you've got the education, if you've got the experience and you've got the emotions in check you can really make some money now because the opportunities are there. 

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We're seeing them all the time now. It doesn't mean that you're seeing huge price drops, we're not seeing huge price drops. We're seeing down values and things like that here and there and all that around the place but that's more because not because there's been necessarily a down value it's becomes you know someone's been instructed to down value everything and they're just playing that game. It's more of a cover your ass you know cya then,  an actual reality of what's happened in the market.

The market's gone up about five to seven percent you know we'll see what happens you know this month next month. October was a bit of a you know we weren't expecting it to continue to grow and it has continued to grow and potentially well we'll see what happens with November now with the lockdown. 

Video Transcription

Property funds are dead! Look guys do I believe property funds are dead?

Do I believe property funds are dead? This says UK unfrozen property funds, see more than £300 million in October outflows.

Basically what they're talking about is property funds which is where you pay money into a pension you know and then that pension invests into a property fund that buys property and works it that way. The question is you know are these things dead? Well you know what I put that headline there and I'll be using that headline for a little while now, because it seems every change that happens to buy to let people say oh buy to let dead. Well I've been hearing this for 20 years, you know in fact I've been hearing this back in Australia. I've been hearing that you know investment properties are dead,  it's the same headline, it's just headline grabbing. The reality is property funds are here, they're here to stay they're actually going to get even bigger because with build to rent and things like that these sort of schemes. They've got £300 million but actually if you look at the billions that is invested £300 million is like you know not even worth even worrying about. So you know I think this is where headlines can be deceiving. Property funds aren't dead, buy to let isn't dead, you know yes right now lots of things are struggling to make the returns they were. If you look at over a long period of time I mean over my whole career we've gone from where you could earn 15% 10 to 15 percent and that was kind of the accepted norm. Down to sort of where you've got you know 5% to 8% percent down to where now you sort of could be looking at you know 3% to 5% is what you'd be expecting. That's the long-term trend then we're heading to where actually you know virtually our growth will be smaller and it's been squeezed. It's interesting but if you look at the way back I showed you the money supply thing and had nine different if you look since 1960 there've been nine recessions. Those nine recessions happen on average every 6.6 years. That means recessions are happening more often but they're not as bad. The thing with a recession and what I've found being through three of them now okay is that they're really bad if you lose your job, if your business falls over, if you do that. They're inconvenient for most other people but then some people boom in a recession. It's not a case where these recessions are the worst thing on the market, actually we talk about zigzag, we talk about contrarian theory, we talk about you know when everyone's doing this you do this. So you've got to find the opportunity now. I think that's one of the key things you know is where are the opportunities now? If you've got the education, if you've got the experience and you've got the emotions in check you can really make some money now because the opportunities are there. We're seeing them all the time now. It doesn't mean that you're seeing huge price drops, we're not seeing huge price drops. We're seeing down values and things like that here and there and all that around the place but that's more because not because there's been necessarily a down value it's becomes you know someone's been instructed to down value everything and they're just playing that game. It's more of a cover your ass you know cya then an actual reality of what's happened in the market. The market's gone up about five to seven percent you know we'll see what happens you know this month next month. October was a bit of a you know we weren't expecting it to continue to grow and it has continued to grow and potentially well we'll see what happens with November now with the lockdown.


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