Thinking outside the box – The Property Chronicle
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Thinking outside the box

Investor's Notebook

How forging a new path in the property market can reap big rewards

I have several guidelines to which I have mostly adhered when investing. Amongst others, this includes targeting high yielding properties: properties with sustainable income streams and in defensible locations. But the most important guideline I have is to think from first principles, always be prepared to jettison guidelines and ignore received wisdom.

Following the 9/11 terrorist attacks, stock and bond markets in the US fell sharply. This prompted the US Federal Reserve to cut interest rates, despite there being no shock to the underlying economy – an entirely inappropriate reason to cut interest rates. Nevertheless, other central banks in the West followed suit. Commercial property yields were initially high and, with the cuts in interest rates, leveraged investors were suddenly able to earn development type returns from relatively secure investment property. I had never seen anything like it in my career. I was compelled to raise as much capital as possible and take advantage of the returns available – so First Property Asset Management was established.

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