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Investment Objectives - Coggle Diagram
Investment Objectives
Construction of assets
Architects, developers and others may seek to fund brand new projects from the ground up
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Investors opting to invest in funds which are constructing the fund assets should expect to invest their money for a considerable period of time as the properties do not begin to perform until they are fully constructed, a period of investment from 3 years is not unusual
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Improvement
It may make good economic sense to purchase already existing property and enhance it to generate profits
This could include improving residential property to attract a new market of clientele (eg in up and coming locales), to subdivide it into a greater number of properties or to repurpose it (eg turning school buildings or commercial properties such as mills and factories into new rest properties or office space)
Rental
A number of rental markets exist in respect of property, including rest, commercial and office properties with many market participants unable or unwilling to own properties outright
Eg those who are looking for office space but may not have the means or critical mass to buy the type of office space they aspire to this creates an attractive proposition to own office property and lease it on a sub-divions basis
This is also an attractive model in multi-purpose properties where some space may be leased as office space and other as retail units, gyms, hotels etc
The fund manager can utilise their skill to manage the building and to find quality tenants for the building, enhancing the value of the overall piece by maintaining high occupancy levels (which increases demand and thus rent that may be demanded)
Management
Different types of property require different skills to ensure that they are retained in a way that is profitable and appropriate
As property needs change, more and more areas of skill are developing in order to understand this needs
In recent years, this has included new markets being created for student accommodation, where we are seeing the decline private landlord properties in favour of services properties recommended to or attached to specific universities
Disposal
Ultimately an investment fund must have a way of disposing of its property assets, at the very least in order two wind down the investment fund and return final monies to investors
Dispoal may be the main investment objective or may be in order to realise residual assets, including to realise a capital gain or even in the expectation that the asset is a wasting asset