Although the financial crisis that has led to a severe global economic downturn had many causes, property, in the shape of sub-prime loans in the US, can be regarded as a key catalyst. At the turn of this century, property sucked in billions of dollars of investment as homeowners and investors around the world sought to capitalise on a heady asset price boom and on the availability of cheap credit. But for many, there was a hard landing to come, and a reminder that, although property has been a source of huge new wealth around the world, it has also proved to be many investors’ undoing.
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There is a temptation to regard property as a ‘straightforward’ investment. Unlike other asset classes it is universal. At some point in our lives, the vast majority of us invest in bricks and mortar when we buy our own homes, so it can seem like a short leap to invest in property purely for financial gain. But while direct property investment may not have the financial complexity of some other financial products, it is by no means simple.
As evidence of a gradual economic recovery mounts, investors are once again eyeing property markets after many have fallen precipitously from earlier highs. While few will have the confidence to call the bottom with certainty, a growing number of investors consider that the descent has been deep enough to start preparing for the eventual upturn, and are making selective investments. Indeed, in recent months, some property markets have bounced back strongly and are appreciating in value.
This report, the tenth in the Barclays Wealth Insights series, examines the outlook for the global residential and commercial property markets through the eyes of high net worth individuals. Based on a major survey and a series of interviews with high-level property experts, the report also looks at the advantages and disadvantages of property investment and explores how investors manage property as part of a broader investment portfolio.