Investing in real estate
Investing in real estate

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Investing in real estate
  • Reasons for investing
  • Ways of investing
  • Investment vehicles
  • Limited partnerships
  • Limited liability partnerships
  • General partnerships
  • Corporate vehicles (SPVs)
  • Financing the investment
  • Protecting the loan
  • More...

Notwithstanding the constraints imposed by the recent credit crisis, investing in real estate has grown significantly in popularity over the last few years.

Reasons for investing

There are a number of factors that make investing in this particular sector attractive. In particular, real estate offers:

  1. good long term growth both in terms of the value of the asset itself and in relation to other assets such as equities and long term government bonds

  2. low volatility compared to bonds and equities together with relatively high income

  3. tangible assets which, unlike intangible assets, retain some intrinsic value for investors (in terms of sale or rental potential) even in an economic downturn, and

  4. a distinct class of assets whose financial performance is not directly correlated to the general economic cycle and which allows investors to diversify their investment base

Ways of investing

In choosing to invest in real estate in the UK investors have a number of options in terms of the investment vehicle they use in order to most efficiently realise their long term objectives. Some of the most popular vehicles include:

  1. limited partnerships

  2. limited liability partnerships

  3. general partnerships, and

  4. corporate vehicles (Special Purpose Vehicles)

For information on REITs as a tax efficient way of investing in real estate, see Lexis®PSL Property Practice Note: UK REITs—the basics.

Investment vehicles

Limited partnerships

Limited partnerships (LPs) offer limited liability to investors provided that they are

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