Property investment
Categories and characteristics
The term 'property investment' refers to investments in real estate with the aim of generating returns from rental income or operations and from capital appreciation. Property investment is defined by its physical nature and its direct link to economic fundamentals.
Residential property
Property investments in the housing sector include single-family homes, apartments, and specialised residential forms. This category offers stable rental flows and relatively predictable valuations due to continuous demand for housing.
Commercial property
Offices, retail units, and industrial spaces form the commercial real estate segment. Returns fluctuate with economic cycles. Lease terms and tenant quality determine the risk profile.
Operational property
In operational property, the building itself is the source of business income. A car park earns revenue through parking transactions, a hotel through room rentals. This differs from offices or shops, where tenants generate their turnover with other products or services outside of the property itself.
This distinction shapes the contract structure. Lease agreements with fixed rent offer investors stability, as the operator carries the operational risk. Under management agreements, the risk lies with the owner, which can lead to higher returns. This category requires specialist knowledge of both real estate and market and operational processes.
Logistics property
Distribution centres and warehouses support logistics chains. The location near transport hubs and building characteristics determine the value of these property investments.
What types of property investments are there?
Characteristics of property investments
A property investment generates two components of return: direct income from rental or operations and indirect gains from capital growth. This dual structure sets property apart from other investment categories.
Its correlation with financial markets is limited, making property investments valuable for portfolio diversification. The tangible nature of real estate brings a different dynamic than purely financial instruments.
Inflation hedging arises from indexation clauses in lease contracts and value adjustments that generally follow overall price developments. This characteristic makes property investment relevant for long-term wealth building.
Direct ownership
For high-net-worth investors, directly acquiring investment property can be an option. This requires in-depth market knowledge, substantial capital, and a willingness to be actively involved in property management.
Investment structures
Property funds
Funds provide access to professionally managed property investments without the complexity of direct ownership. This investment form combines the advantages of real estate with professional management and lower entry thresholds.
Listed property funds
REITs and listed property funds offer liquidity and diversification, but often behave more like equities than direct real estate.
Crowdfunding
Property crowdfunding platforms enable smaller investments in specific projects, though this form carries its own risks and complexities.
Successful property investment often requires specialisation in specific sectors or geographic markets. Operational property, for instance, demands in-depth knowledge of operational aspects in addition to traditional real estate expertise.
For investors considering specialised real estate investments, it’s essential to partner with those who have proven expertise in the relevant sector. This is especially true for more complex categories such as operational property, where operational performance directly affects property returns.
Operational investment property as a specialisation
Want to know more about property investments?
Property investment offers attractive opportunities for investors seeking diversification and stable returns. Are you considering starting with property investments? Or looking to expand your current portfolio? Careful preparation and the right expertise are key to success. At Orange IM, we’re happy to guide you through our investment opportunities. We stand for transparent communication and are keen to share our knowledge and expertise. Curious about our investment options?
info@orangeim.nl
+31 (0)20 - 2117688
Orange IM Fund Management b.v.
Wibautstraat 137h
1097 DN Amsterdam
The Netherlands
If you register, you agree to the use of your data according to our privacy statement.