After a strong 2016 performance despite the Brexit uncertainty, 2017 is set to be another great year for the Castel Residential Property Fund with the recent rise in inflation bringing good news for investors.
With CPI linked rental agreements, the Castel Residential Property Fund is perfectly positioned to take advantage of the recent inflation rises. With the security of UK Government supported long term leases, with no rental voids, Castel positively differentiates itself from other property funds and the customary pitfalls they suffer.
After a turbulent year for property funds, Castel Residential continued to generate revenue for investors, remained open continuously and suffered no negative effects from the fallout of Brexit.
The Fund provides residential housing to individuals with disabilities and comes with a UK Government supported long-term lease (average 20 year) with an average rental yield of 5.75%. The Fund targets annual returns in excess of 8% per annum and has achieved this consistently since inception.
Annual inflation as measured by the consumer price index (CPI) reached 1.8% last month. This is the fourth consecutive month that the rate has risen, taking inflation to its highest rate since June 2014.
This increase means CPI inflation is now within touching distance of The Bank of England’s 2% target. This along with the relatively sanguine attitude towards inflation has led to speculation that the banks will increase rates.
After years of seemingly non-existent inflation, it is easy to assume one doesn’t need to be concerned with inflation protection when investment planning. However, with CPI inflation only moving one way, inflationary investment risk has once again become a real issue, with investors seeking out alternative investments that provide real returns. Traditionally, investing your money on the stock market has been seen as the best ‘hedge’ against inflation. Taking on additional risk with your savings can potentially provide returns that outstrip the rising costs of goods and services. However, with the stock markets unpredictable behaviour scaring many investors in 2016 and the eight year bull market being marked this year, many investors have been left asking if this ageing bull market can keep lumbering forward or if it’s time to get out and look elsewhere.
