Keystone Property Group brings property developers and investors together on secure high-quality projects across the UK and internationally. Here MD Desmond Conway tells unLTD what the Sheffield City Region can learn from one the firm’s first ever project in Milton Keynes
Three years ago, we set out to offer innovative property solutions to investors and developers. At the time our options were an entirely new form of investment for many domestic investors.
But our efforts paid off on our first project, a development on Silbury Boulevard in Milton Keynes.
Here’s how:
Goal
To allow investors a way into the U.K. property market without having to plan around changes in the legislature or void periods. Where possible, we wanted to allow entry at developer level, and eliminate the typical headaches associated with property investment and ownership.
We wanted to bring property developers and investors together on secure high-quality projects. The best way for us to do so was by creating development finance options. Whereby, property investors fund developers’ key projects, in return for interest on their invested capital.
We identified purpose-built rental accommodation as an emerging market that could yield the results we wanted. And Milton Keynes was the perfect location for our first project, due to its strong commuter links.
Challenges
In the UK, the private rented sector is primarily known for buy-to-let investments. Someone owns a property and ‘lets it out’ to another person, cue the landlord-tenant relationship.
Build-to-Rent developments were only just starting to take-off and as such were a relatively unknown entity.
Many mainstream investments, either property or shares, offer backers some form of ownership. Whereas our opportunity focused on a partnership over a set time period, eliminating ownership and solely focusing on profit delivery for the investor.
Solution
To reassure potential investors of the viability of the Build-to-Rent market, it was important that we partner with leading developers, firms that had a track-record delivering high-quality property.
A downside of traditional buy-to-let investment is that although investors can benefit from below market value assets and favourable lending rates. The rate of return is uncertain, so our option offered a fixed-rate minimum annual return.
Although, investors don’t own the property there are strong security measures in place, in the form of a third-party Security Trustee.
Results
Instead of ploughing capital into buying a property and covering upkeep costs, investors entered the property market at a lower amount – putting their money to work in a hands-off investment, that awarded an average 22.5 per cent return.
Work on the Silbury Boulevard development has progressed rapidly externally and internally. Final touches are being made to apartments on multiple floors, including mechanical and electrical fit-out, kitchens, and terrace balustrade.
Since the investment exited in 2017, we’ve financed a further eight site acquisitions and exited six more projects. Meanwhile this year, our investors have seen a cumulative return exceeding 60 per cent.
It really goes to show that our alternative property investment opportunities and the wider market, consistently deliver high-returns for investors.