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Property Investors Advised To Diversify Portfolio
September 16, 2009Article by Ray Withers
Investors have been advised to diversify their portfolio by property investment consultancy Property Frontiers.The Oxford based firm recommended a timber investment in the tropical rainforests of Sri Lanka as an ideal entry level investment, as a perfect way to diversify a real estate portfolio, and or as a perfect way to secure your financial future (SIPP approved).Property Frontiers director Ray Withers said:
“We live in a changed world. While we still consider ourselves property investment specialists, anyone who didn’t know the importance of having a diversified portfolio quickly learned it over the last 2 years. For that reason we are and will continue to diversify the range of investment products we offer, so that our clients can diversify their portfolios with a company that has earned their trust.
There are a lot of these types of investment products around at the moment, targeted at those keen to put something away for the future that returns more than the nothing currently on offer at the bank, and who may or may not have been scared away from property investment by the cancelled developments the crunch caused.
That said, this is actually the first timber investment I have come across and I have to say it is rather intriguing. Investors buy seedlings; they get to choose the duration and the type of timber they invest in. The minimum investment is £10,000, which buys a say in the growth and harvest of Agarwood tress for a six year period, and is expected to return in excess of £40,000. The maximum yielding product is teak seedlings over a 15 year term, which is expected to return over £240,000 for a £15,000 investment.
Timber investment is so lucrative according to Property Frontiers, because of the massively rising demand that cannot physically be met because of the nature of the beast.Ben Jeffries a sourcing manager with the firm said:
“In recent years wood flooring has become massively popular. In fact demand has multiplied 25 times in the last four decades due to the growth in global populations, and the United Nations predicts a further 60% rise in demand over the next 25 years.
“Tropical wood species are among the most popular. They are also among the most expensive because short-supply makes the products difficult to obtain. This makes an investment like this somewhat of a no-brainer, especially when you take it as part of your SIPP.”Harvard University share the opinion of Property Frontiers, having invested 12% of its endowment fund in timber, with $500 million invested last year alone.