Followers of this blog will have noticed that we have talked about student accommodation several times over the past few months.  This is because students are very much in the news.  In the UK, numbers are rising dramatically, fuelled the inordinate stress placed these days on academic forms of education and reinforced by recession-based anxieties.  This makes many people want either to ‘re-skill’ and acquire new qualifications, or to postpone the moment of entry to the job market. 

Work patterns are changing, too, and so is the profile of the student.  She or he (for there are more women than men in higher education) is more likely to be a few years older than previously and to have extensive work or volunteering experience.  We are changing our idea of what it means to be a student and ‘lifelong learning’ is becoming the norm.

This year, according to The Independent (19th August 2010), 674,037 people have applied to start undergraduate courses this autumn.  Postgrad numbers are swelling as well.  Many will be moving away from home, often for the first time, and will need affordable,  safe and clean accommodation.  This is why student accommodation has become such a great investment opportunity – and a public service into the bargain.  It is a new frontier, as we predicted, and as our success with Beacon and Streatlam House has shown.  And it is a frontier with flexible borders.

You read it here first …

Agarwood is such a precious commodity that its value is pegged at 1.5 time that of gold! It is not yet a household name in Western countries, but it has been highly prized for many centuries across Asia.  In the Arab world, it is known as Oud (or Oudh) and is the basis for the most luxurious perfume and soap products – as well as a byword for wealth and exclusivity.  The Gulf States market alone is worth $3.2 billion. 

Recently, the ‘perfumes of Arabia’ have moved westwards as Yves St Laurent and other top brands have become aware of its quality and value.  They now insist on Agar oil for many of their most prestigious products.  This is but the latest stage in Agar’s journey across cultures.  In Japan, for instance, Samurai warriors scented their armour with Agarwood smoke for good luck in battle.  There, it is known as Jinko which means the ‘wood that sinks in water’.  There is a legend that it was washed ashore in the 7th century, then buried in the ground, from which the aroma eventually captivated the Emperor. 

Agarwood is linked equally with material opulence and spiritual aspirations.  It is known as ’the wood of the gods’ because it is used as incense by many of the world’s great religions, including Buddhism, Hinduism, the mystical Sufi schools of Islam and the ancient Shinto faith of Japan.  The Buddha described the smell of Agarwood as ‘the scent of Nirvana’.  Agarwood therefore satisfies two of the deepest human needs – material comfort and status, at one level, but also the need for something higher than the self.

So what is this enigmatic product?  Agarwood is the dark resin produced by the rare Aquilaria tree that grows all over South-East Asia and parts of the Indian Subcontinent.  In the wild, this resin is secreted by around 1% of the trees because of a fungal infection.  During the process of resisting the fungus, a precious oil is generated at the core of the tree.  This is surely one of nature’s little-known wonders.   The healing properties of Agar are widely known and have become staples of Tibetan and Chinese medicine, especially for treating anxiety and stress.  They are used in the Indian healing techniques of Ayurveda and the traditional Islamic medical system of Unani. Interest in these holistic techniques is rising in the West, another reason why Agar’s time has come.

Aquliaria trees are now in danger of extinction, just as demand for their products is on the rise.  Now, EcoInvestments – a division of Property Frontiers – has teamed up with a plantation company with more than 20 years track record as the sole agent for a new Agarwood investment package.  Crucially, our growers have the exclusive patent for an organic process that ensures 100% production of resin by the Aquliaria Crassna tree. This ensures 100% production of Agar – and also ensures that the trees are protected and conserved.

You can invest from as little as $8,310 and expect a return of $25,088 in 7 years, the length of the investment term.  At 19.5%, Agarwood has the highest IRR (Internal Rate of Return, i.e. Client Return) of any of our alternative investments. 

This is a really special product with a distinguished history that is fast emerging onto the world market.  Literally, it is more than a golden opportunity for investors.

Invest in the UK Residential Market Through Your SIPP … And Beat CGT!

This is another example of the new type of investment product we are promoting over this summer. Property Frontiers has secured a channel to a continuous supply of discounted residential properties across the UK market via a partnership with a UK property brokerage and sourcing firm. More than 300 deals have already been completed and new stock is being continuously secured.

The discount is measured against RICS statistics rather than historic peaks. With average discounts of 25%, this means a real discount of 30% against the market peak of October 2007. Key Advantages Include: an immediate equity gain; solid investments with tenants already in place; rental yields of 7-12%; average ‘real’ discounts of 30%; invest via your SIPP.

One of this product’s best – and most unusual – features is that you can invest in it via your Self-Invested Personal Pension (SIPP). The key characteristic of a SIPP is the wide range of investment choice it provides across the market – as opposed to restrictive traditional pension plans. Through this Property Frontiers package, clients who have a SIPP will be able to use it to invest in discounted UK properties. SIPP investors enjoy tax relief on contributions and investment returns are generally fee from income tax and Capital Gains Tax (CGT).

On retirement or when the investor is looking to draw an income, 25% of the current value of the plan can be paid as a tax free lump sum. This opportunity therefore allows SIPP investments exposure to the UK residential market without the threat of CGT! But with or without a SIPP, you can gain access to the residential property market at well below the usual market price.

The primary focus of Property Frontiers is and will continue to be investment overseas.  But the home market is also a ’frontier’ that we are not afraid to cross.

The international property market is changing, like everything else in the current economic climate, to reflect the shifting priorities of investors.  This is why we are sourcing several new types of product.

For example, how would you like to invest in one of the most viable investment market – a luxury hotel with occupancy of 80% and fixed returns of 10%?  Complete before 15^th September and all legal fees will be paid by the developer.

Imagine what it would be like to own your own suite of rooms.  You could stay there by arrangement at whatever time of the year you chose, enjoying all the hotel’s five-star facilities.  Or you could simply let the rooms and collect income from the proceeds.  There would be no management chores – you could literally sit back and enjoy your share in the hotel.

This product has the following outstanding features:

• Invest from just $40,000 (£26,700)
• Guaranteed annual net yield of 10% for first 5 years
• Projected yield of 10.9% in years 5-10
• Projected 296% Return on Investment over a 10 year period
• Returns payable from beginning of your investment
• Built-in exit strategy at year 10
• World class hotel management company in place
• Secure title and ownership
• Prices are 17% discount to RICS valuation

All this is now possible with a special package put together by Property Frontiers.  It enables you to buy your own share in a luxury hotel complex at far less than the usual market rate.  This provides a share in the luxury travel market to middle-income investors or the chance to extend an existing portfolio without personal risk.

This is only an outline of what we currently have on offer: contact Property Frontiers for full details.  I cite it as an example of the new types of property investment options now open and also as an example of new ways of thinking about the international property market. Such products show that, ironically, these straitened times can be used to extend rather than diminish opportunities for investors.

… AND ONLY FOUR UNITS LEFT AT £45,000!

This week has seen a major breakthrough with the granting of planning permission for the development of Streatlam Towers, in central Liverpool, into accommodation for students.  This will be nothing like the drab, Stalinist-looking  ’Halls of Residence’  or  Spartan college accommodation that some of can us remember from our youth.  Instead, each of the 39 student units or ‘pods’ will be fully furnished, with a flat screen TV and internet access. Students will have the use of communal bathrooms, kitchens and living areas, with a gym and a computer room for good measure.

There are 36 units, of which 32 have been sold.  The ‘pods’ are an excellent investment opportunity.  At a cost of only £45,000, you can expect a net yield of 8.9% and a gross income of £5,355 per year.  A supply of tenants is guaranteed throughout the year and, according to Knight Frank,  rental growth in this sector remains strong: 5% per annum over the last six years, compared to 0.6% for commercial property.

Streatlam Towers is a new departure for Property Frontiers, following our recent success with Beacon Building, also in Liverpool.  It is a recession-proof area as, during the economic downturn, many are staying in higher education, while other return to eduction to gain new skills.  The number of returning postgraduate students has risen to 24% of all students.  In addition to this, the number of overseas students is rising fast. The profile of the ‘student’ is changing.  Most are still in their early 20s studying for three or four year degrees (or somewhat longer for medics), but a growing number are mature people with work experience who are acquiring new skills.

Liverpool has over 80,000 students in 3 universities that are highly regarded at home and abroad.  Streatlam Towers is within easy reach of all of them and benefits from its position in the centre of a city that is undergoing a cultural and economic renaissance and has a proud history.  It is an imposing listed building, once the first Museum of Japanese Art in the UK – and it will now combine old-world elegance with practical modern comforts.

The discussion of the ‘F’ word – Fractional Ownership – continues.  Companies dedicated to the fractional process report that the word has no negative connotations for their clients, who are already familiar with the concept.  Fractional ownership exists at many different levels – paintings, cars, wines, club memberships, etc. … Perhaps there will be fractional relationships, fractional marriages and fractional dating agencies  soon: the idea is not completely far-fetched and don’t forget that you heard it here first!  An in this context, it certainly sounds better than ‘shared’!

On a more serious note,  the fractional – or shared – model can be seen as a form of ownership for our time.  It opens up markets and products (as in the case of Bacolet Bay’s ‘affordable luxury’).  It allows investors to diversify and spread their portfolios.  It democratises ownership.  

That said, a fractional/shared investment usually assumes a long-term commitment and, as in any form of sharing, the needs of others must be taken into account.  Often, exit strategies need to be worked out by consensus rather than determined by immediate individual wish.  This could be said to entail a loss of independence.  But it also confers a secure ownership structure and – as with the now more familiar  ’share of freehold’ - spreads responsibility.   

For Property Frontiers, fractional/shared products are a new concept, both for us and our clients.  There is therefore ‘the shock of the new’ – more of a problem on this side of the Atlantic than the US.  This is combibned with healthy scepticism about an unfamiliar product.  Yet this pattern of ownership is the way forward for many investors. It can offer a form of liberation from the ‘age of austerity’. 

It will be interesting to see the concept gather momentum, whatever word we use to describe it.

George Bernard Shaw once remarked that the British and the Americans are ‘divided by a common language’.  Nowhere is this more true than in the case of  ‘fractional ownership’.

Fractional ownership has caught on well with US investors for some years now, because it makes sense.  Owning a portion – otherwise known as a ‘fraction’ –  of a property investment opens a range of new possibilities to the investor.  It makes luxury properties affordable.  Because of fractional ownership, one of our flagship products – Caribbean Residences at Bacolet Bay, Grenada, is within reach of many investors who would not have considered the idea even a few months ago.  With fractional ownership, investors enjoy full rights of ownership (or ‘usufruct’), including the right to raise rental income for a portion of the year.

But there is a problem – the word fraction.  We have found that in Britain, unlike the US, using the ‘F word’ raises eyebrows.  This is partly, of course, because nobody ever uses F words at Property Frontiers during the normal course of events. …  It is mainly because the word ‘fraction’ suggests to British ears a breaking-up or smashing into small pieces.

This tells us something about the way we use language and, perhaps, some of the cultural differences reflected in our choice of words.  Americans are more direct, more logical and in the best sense more literal in the way they approach words.  In Britain, our approach is more sceptical and cautious: the glass is always half-empty, or in this case broken into small pieces!  We are also perhaps more argumentative – i.e. ‘fractious’ and more ready to suspect the motives of others.

Our experience with the word fraction reminds us that we neglect such cultural niceties at our peril.  ‘Shared ownership’ means exactly the same thing as ‘fractional ownership’ but stirs warmer feelings in British hearts.  It conjures up reassuring,  even homely images as well as appealing to the concern for equality and fair play, which as a nation we profess often but fulfil less frequently.

So it’s  ‘Down with Fractional Ownership, Long Live Shared Ownership!’  This has been a steep learning curve for us and a welcome reminder to choose our  words with care.

At first glance it is hard to think of two investment types more contrasting than the Village at Town Center development in Florida and the Dual Forestry Investment in Sandalwood and Bamboo.

Let’s start with the Village at Town Center (VTC), a luxury condominium community in Orlando, Florida. A range of two and three-bed units are available for long-term rentals and vacation use – or a combination of both. Property Frontiers is bringing you a unique opportunity to purchase our few remaining two and three bed units at well below market price. Outstanding resort facilities include: landscaped grounds and walking areas; spectacular clubhouse; state of the art gym/fitness centre; swimming pool and floodlit tennis court.

Set in an exclusive and safe environment, VTC has excellent facilities and is close to some of the top tourist attractions in the world, including Universal Studios, the Kennedy Space Center, Seaworld Orlando, Walt Disney World and The Wizarding World of Harry Potter. (Something for everyone, you might say?!)

Despite the overall economic situation in the US, the economy is actually growing in Metro Orlando. A young, diverse and educated workforce is making the area a creative hub: a $13.4 billion high tech industry employs close to 53,000 people and the nearby University of Central Florida has over 50,000 students. Best of all for investors, the units start at US$ 67,900. VTC is especially attractive to lifestyle investors who are looking for a vacation home or even to relocate. Yet it is also a useful source of rental income in an area replete with young and well-qualified professional people.

A young, diverse and creative workforce is making this corner of the United States a creative hub. For example, a $13.4 billion hi-tech industry employs close to 53,000 people and the nearby University of Central Florida has over 50,000 students. Small wonder that these units have been selling rapidly since the end of 2009 and there are only a small number left. …

Dual Forestry, by contrast, is one of our new Eco-Investments. Unlike the others, it offers two products for the price of one – practical Bamboo and luxury Sandalwood (or ‘Bamblewood’ as it is has become known in the office). The investment is spread across two countries, Thailand and Sri Lanka and there is the chance to earn both rental income and a lump sum. Investments are long term: the lump sum payment comes at Year 16. They start at US$30,000 – with a possible return of $306,858! For more details of the investment and the products, see my 07 July Blog below.

So what do these two investments have in common? Both invite long-term commitment to a high quality product, one in property, the other in tropical hardwood plantations. Both are versatile. VTC is just as good as a holiday home or a rental investment, ‘Bamblewood’ provides income and capital returns. Both are within the reach of middle-income investments. These apparently contrasting products illustrate two things: the growing diversity of our activities and the wider range of options being considered by our investors in changing times.

Follow us on Twitter: http://twitter.com/propfrontiers

We have previously referred in this blog to the phrase ‘May you live in interesting times’. It is reputedly an ancient Chinese curse, followed by a second, more powerful invocation ‘May the government be aware of you!’ Unfortunately, it seems that this is an early example of the urban myth and was coined by the Americans or the British. But it could be related to a real Chinese saying that loses something in translation but is still evocative: ‘Better to be a dog in peacetime than a man in a chaotic period’.

Whatever the origin of the phrase, there are few more ‘interesting’ times than the present period of financial meltdown followed by economic austerity. This is why we are launching a new series of seminars to help investors navigate their way through the present volatile market conditions and turn crisis into opportunity. We are aiming to look beyond both the doom mongering headlines and the feverish predictions of ‘recovery’. For we believe that the changes in the property market are profound and part of a wider economic trend that is likely to be long-term or even permanent. Instead of pessimism, we should embrace these changes creatively and learn to think about the property market from many angles.

There are signs that this is already happening. For example, 65% of our overseas investors this year have expressed interest in fractional investments (or ‘fractured’ they call them across the Pond) – whether that means fractional ownership, as in our luxury development at Bacolet Bay, Grenada or commodities such as bamboo and sandalwood. Property in the UK is also of interest – fractional ownership of student halls is proving popular with investors and this is a market that is not going to go away, whatever the Con-Dem Coalition does with fees and graduate taxes. People are starting to think laterally about the property market and look in unexpected places – both in terms of geography and type of product. The 65% figure looking at alternative investments is almost double last year’s, showing that the property market is reinventing itself or shape-shifting in ways that are varied and (in the best sense of the word) interesting.

There is something exhilarating about these trends, despite the economic climate that has accelerated them. Now for the promotional bit: I shall be speaking at the Hilton London Metropole, 225 Edgware Road, London W12 1JU on Thursday 22nd July. The theme will be ‘Property Investment in the Age of Austerity’. My co-presenter will be Property Frontiers Director David Cox. There will also be a presentation by Edward Stevenson and Robert Du Toit on ‘The Other Side of the Coin: The Upside of the Downturn’. Edward is a member of the UK Society of Investment Professionals and Robert is founder of QI Properties, an investment company offering discounted residential properties across the UK.

The whole event will last from 6.30 to 9.30 pm (that’s 1830 to 2130 if you prefer railway or military time). The response has been excellent, showing that interest in the property market remains stronger than ever. If anything it is strengthened by changed There are only a handful of places left and so if you are interested please drop an email to Kelly Stevens – kstevens@propertyfrontiers.com This is the first of a number of key events in different parts of the country as Property Frontiers takes to the road. Our aim is to explore new ways of thinking about property, but more important than that to listen to the people who matter to us most, our clients. We therefore hope to meet as many of you as we can.

The international property market is becoming increasingly diverse – and dispersed. New markets take off, whilst others decline or stagnate. Investors, quite naturally, are seeking to spread their assets over a wider geographical area, as well as considering new commodities such as bamboo. They are spreading their nets both geographically and in the range of products they are prepared to consider.

Our aim at Property Frontiers is both to respond to these market trends and stay ahead of them, giving our clients a creative and constructive lead. The shift of global economic power and the state of flux in the financial markets often points us towards counter-intuitive leaps. We find new sites – and commodities – in areas that would not have previously seemed at all obvious and would often have aroused anxiety in the recent past.

In the area of property investment and wealth management, intuitive leaps – the so-called ‘eureka moments’ – are a great start, but not enough in themselves. The important next step is to transform creative inspiration into a package that combines good returns (capital, income or preferably both) with security and a sound exit strategy. We look for opportunities that appeal to the growing band of middle-income investors (see the 5th July blog on Fractional Ownership, for instance) and the higher-income band investor who wishes to diversify as much as possible. I have previously described security and diversity as the Yin and Yang of international investment. In this climate, clients are looking for a positive interplay of safety and creativity.

Yesterday’s blog referred to Sri Lanka – as the launching pad for our exciting new commodity investment, Dual Forestry, and as a potentially lucrative property market now that peace has returned and development taken off with a vengeance. Excited commentators cite it as the new ‘hot spot’ – comparable to Thailand or Bali fifteen years ago. But at Property Frontiers, we have to take the long view. We share the good feelings about Sri Lanka, but before we go further we shall be looking at the whole picture, including human rights reports, property law, the legal and political situation, and the mechanics of the peace process. We are asking rigorous questions because our investors – that is to say you – deserve no less.

This is not a one-way or top-down process: input from you, as readers, is not only welcome but essential. Which countries, and which commodities, do you think we should look at? What potential areas of development are we currently ignoring or neglecting?

Our market is increasingly democratic and pluralist – like many of the rapidly expanding economies where we now work.

Follow us on Twitter: http://twitter.com/propfrontiers