Shrugging off worries about the UK property market, London Central Portfolio, a real estate asset manager, is launching a portfolio targeted at wealthy investors who wish to get exposure to bricks-and-mortar assets in the six-mile zone around Hyde Park in central London.

Existing property and land on which to build is severely limited in areas such as Knightsbridge, Mayfair, Chelsea and Kensington, causing prices to rise by an average of nine per cent per annum, the equivalent of a doubling every eight years.

The London Central Portfolio Property Fund II aims to achieve both high quality income through rental yields, as well as capital growth, by providing investors with a property foothold in what LCP describes as the exclusive “bulls eye” of central London. A portfolio of 20 to 25 one and two bedroom flats will be purchased for inclusion in the fund, refurbished and let to ‘blue-chip’ corporate tenants.

This is the second fund to be launched by LCP. The original fund was launched late in 2007. Although it is still early to glean performance figures, the fund looks to have outperformed expectations and achieved an uplift of four per cent in a static market in its first three months, which LCP attributes to it skilled negotiation on property prices.

The increasing scarcity of prime residential  property in the capital, not to mention benefit to London as it heads towards hosting the 2012 Olympics, are expected to boost the market further. LCP said it is confident the new fund can provide investors with a 15 per cent return per annum, or a one-hundred per cent return on their investment over five years.

Naomi Heaton, LCP chief executive, said property in central London is increasingly viewed as an alternative asset class because it has a low correlation with other asset classes.

The fund’s launch is timely, said Ms Heaton and she expects a rapid reversal of sentiment around prime property in central London.

“So the smart investor will want to buy now rather than later, taking advantage of significant opportunities presenting themselves to the experienced contra-cyclical fund manager. These investors will take heed of the prophetic words of James Goldsmith, 'when you see a bandwagon, it is too late'," said Ms Heaton.

The gearing for the fund is set at 65 per cent loan to refurbished value and the fund has secured credit of just 1 per cent over base rate to leverage the equity investment.

The investment term is seven years, although early exit options are available, and the minimum investment £50,000. The fund is open for seed subscriptions and fully launches on 3 September 2008, from which point there is a three month investment window.

Established in 1989, LCP has more than £300 million assets under management and assists high net worth individuals with property finding, project management, furnishing, letting and rental management.