Trader profile: Value opportunities in the global property market
Name: Richard Bradstock
Position: Director at IP Global
Based: Abu Dhabi
Years in the industry: 10
What asset class and geography are you focused on?
We focus on real estate as an investment asset and help to manage and build portfolios on a global basis. We are involved in a number of different markets around the world, focusing mainly on mature, low-risk destinations. We are actively buying and managing property in cities such as London, Berlin, New York, Miami, Chicago, Brisbane and Melbourne. Ever since the financial crisis and the ensuing economic uncertainty and troubles, our goal has always been to minimise risk where possible. Those markets have excellent legal protection should things go wrong, as well as being highly in demand.
What is the outlook for the month ahead?
We are launching in Manchester and are having our third foray into the euro zone with Berlin. For investors looking to diversify away from somewhere such as London while taking advantage of the buying power a relatively weak sterling gives you, Manchester provides a more affordable entry level and the benefit of higher yields. We feel that Manchester has an exceedingly good outlook over the next five years or so. Property in Berlin is extremely cheap by major world city standards – central Berlin, for example, is 10 to 15 per cent of the price of central London. Given the weakness in the euro and market factors such as there being a massive undersupply of property in the city, if you buy well we expect that it will be a great news story over the coming five to 10 years.
What are the main risks, either upside or downside, to the outlook?
Most of the market changes we see happening are positive, with recovery in the US and UK economies putting more money in people’s pockets and creating even further demand in what are generally undersupplied markets. This has led us in our search for value opportunities, looking typically in the commuter belt areas or alongside major infrastructure projects that are opening up previously inaccessible or cheaper areas in these markets.
What is the best investment at the moment?
I really like the Brisbane investment story. You have a double whammy of an extremely cheap Aussie dollar for US dollar-based investors – it has weakened dramatically over the past 18 months – and a market that, unlike the other major Australian city, has not grown much in price over the past five years. In fact, it is really only in the past 12 months that it has really started to move significantly. Given the pent-up demand in the system, coupled with the fact that many companies and non-Queensland-based investors are now moving their interests to Brisbane in the search for affordable running costs, it is a perfect time to buy.
What was the best investment you were ever involved in?
We bought a number of units in two properties on City Road back in 2013 close to the Old Street Underground station in London – The Eagle and The Lexicon – substantially before the rest of the units were brought to market. As a result, we were able to give them to our clients at a significantly better price, and today they are all sitting pretty with gains approaching 30 per cent over the past two years.
What was the worst?
In a previous role with another company I was very briefly involved in selling individual student units with guaranteed rental income. Because these are relatively small amounts of money, plus the high guaranteed rent, they were snapped up all over the world. However, the way they are structured means that quite frankly they will never stand up as long-term investment opportunities and I suspect people will lose quite a bit of money on them. There is no secondary market, and despite low costs they are probably overpriced to begin with. It is a shame, as the student sector done the right way is a great market, but this is not generally the right way.
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Updated: February 12, 2015 04:00 AM