Fund exemplifies London's reliance on banking and dodgy foreign cash
Property investment fund exposes Britain to risks of dodgy foreign cash amid financial push
As a symbol of Britain's ill-advised romance with banking and dubious foreign money, a new prime London property investment fund is hard to beat.
The investment vehicle from asset manager London Central Portfolio, which will commit £100 million (HK$1.29 billion) to prime residential property, amounts to a bet that London retains official policies that make it the corrupt rentier's bolt-hole of choice.
To be clear, there is nothing illicit about investing in London property, but London is what it is because of official policy choices that are good for banking and for wealthy people from less democratic places.
First, a quick take on the fund, which is interesting mostly for the assumptions underlying its mode of doing business.
Citing what it says is a 40-year track record of 9 per cent annual price appreciation in central London property, the fund plans to buy one and two-bedroom units with an eye towards renting them and then flipping them in five to seven years.
It seems money, regardless of its source, is often pleasant enough to blind you to risks
If you consider eternal 9 per cent growth in property prices - even in districts popular with Russian oligarchs - optimistic, wait until you hear about the annual 14 to 18 per cent rate of return the fund is targeting. That figure is only achievable, of course, with a liberal dose of borrowed money.