FSM Asset Management focuses on prime central London residential real estate development.

 

The goal of the company is to produce exceptional returns on investment via the addition of incremental floorspace and, thereafter, offer an inflation protected income stream, asset backed by prime London freeholds.

 

The underlying economics of addressing only the prime central London market are attractive: 

 

• Supply: On the ownership side, there are only c.6,000 houses within prime central London addresses (Belgravia, Chelsea, Knightsbridge and Mayfair).  This means that supply is constrained and that growth in new inventory is almost non-existent in this category of property. In fact it has largely been negative in the recent past.

 

• Demand: On the rental side, c.25% of residents within prime residential areas are international. With a stamp duty levy hike of an additional 2% being implemented from April 2021, this ongoing structural trend (in taxation) to the upside should, amongst other factors, support rental demand in the immediate future. Rental inflation in Kensington and Chelsea and Westminster has averaged c.2% between 2011 and 2019.

 

Value-Added Offering: The company’s value-added proposition is being able to produce an extremely high quality of finish at a lower unit cost than the competition, given that the company enjoys the benefit of an experienced, trusted team that sources direct from a variety of well-studied manufacturers and does not rely on intermediary suppliers. 

 

To be clear, FSM Asset Management’s cost of each additional square foot averages c.£200 per square foot. And for context, properties in the prime central London market regularly re-sale for greater than £2,000 per square foot, with rental rates of c.£50 per square foot per annum. The company also has a robust network of property sourcing agents, which comes with a variety of competitive advantages. 

 

Putting this theory into practice, FSM Asset Management has a proven track record at delivering strong outcomes. 

 

Two examples include:

 

• Property A – Freehold Mayfair 2014 purchase for £1.9m. 2020 registered valuation of £5.0m (given the addition of two floors on the property at a cost of c.£700,000). c.85% un-levered return on equity.

 

• Property B – Freehold Chelsea 2018 purchase for £2.7m. 2020 registered valuation £4.7m (given a basement extension, at a cost of c.£850,000). c.22% un-levered return on equity.