Allowing anyone to invest in property with as little as £1 is the startling premise of a new venture aiming to revolutionise the property and investment market.
As property values have risen year after year, investors have reaped substantial returns. But with the average price of a London home now standing at £530,000, many are excluded from the market.
Describing itself as the Property Stock Exchange, IPSX says it is a unique model that enables ordinary people to buy shares in a £50 million-plus building or building complex.
Chief executive Roger Clarke said: “We are making it possible for everyone and anyone to buy a share in a building.”
How it works
IPSX is an investment opportunity, not a step on to the property ladder. It offers the chance to buy shares in specific real estate assets, such as office blocks, shopping centres, warehouses and leisure complexes. Large-scale residential property is expected to be added later this year.
The buildings are bought by a company, and the value and ownership of the property is broken up into shares, which are then floated as an initial public offering (IPO) and can subsequently be traded, as in a traditional stock exchange.
Shareholders receive a portion of the rent earned on these properties through a regular dividend. With many commercial rents linked to inflation, this gives some long-term protection against the UK’s spiralling prices and can provide a buffer should the property market slow.
Unlike traditional property, where a purchase can take months, IPSX allows people to buy or sell as little as one share in properties daily. And just like with normal shares, the buy and sell price is published on the exchange throughout a normal trading day.
Regular in-depth RICS valuations are provided to keep people updated on the value of the underlying asset. While this does not guarantee performance, it does add transparency and flexibility, with the ultimate aim of letting people manage their property investments in real time.
Shares are ISA and SIPP eligible, allowing those saving for their first home or retirement to benefit.
Like the LSE, IPSX is a Recognised Investment Exchange regulated by the FCA. Where they differ is that IPSX exclusively lists property.
“We felt it important to have a dedicated exchange to stop the share price being pulled around by the wider issues affecting the FTSE and let the share price behave like the property it represents,” explained Mr Clarke. The total return on ISPX-listed properties is over seven per cent a year to date.
Who can invest?
At present opportunities are limited to professional investors, institutions and clients of investment managers.
However, IPSX are working with large investment platforms, such as AJ Bell, to ensure that individuals will be able to add as little as one share in high-quality real estate to their ISA, pension or trading account at the click of a button, potentially by July.
IPSX gained approval in 2019. It saw its first listing, of the Mailbox in Birmingham, in May last year.