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Double-digit development

With world stockmarkets still highly volatile and more likely than not to fall further and the housing market in the doldrums, I believe I have found one property investment which looks likely to achieve double-digit returns. It is a £39.8m development of a prime 150,000 sq ft leisure and office property in the heart of Aberdeen.

It is managed by Strategic Investment Management Limited (investwithsi.com) who have an outstanding record. Returns on their first three properties have varied between 11.3 per cent and 25.2 per cent a year. This development is already partly let and the tenants include Aberdeen City Council, First Group, NCP and Grosvenor Casinos.

They conservatively project returns of over 9 per cent a year, based on assumptions provided by DTZ but actual returns are likely to be in double digits.

They expect to sell the property within eight years which means investors should double their money over seven years if the property is sold then.

This is an ideal investment for pension funds as no tax will be paid on sale.

Aberdeen was the only UK city to see double-digit rental growth earlier this year with rents for prime offices rising by 14 per cent to £28 per sq ft. To put these figures in perspective, SI only assume rents of £15.50 per sq foot for the new office space.

Demand for space in Aberdeen is very strong. During the first half of 2008 over 440,000 sq ft was let in Aberdeen, which is already 19 per cent higher than the total transacted during the whole of 2007. Over £10m of the £13.5m capital required has already been raised and there is only £3.5m still available.

Most of the investment already raised has been from investors in SI’s other developments. In today’s market conditions, I strongly recommend this investment.

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