Property everywhere
Although there has been some positive commentary in various (usually unregulated and less uniform) publications about the outlook for property funds, we will probably not be advising clients to invest in property funds for some time yet, as;
There is a strong prospect of increased vacancies due to the
downturn in the economy affecting many more commercial tenants.
There is a strong prospect of increased vacancies due new
developments, planned and started during the boom years, coming onto the
market. This will also put downward pressure on rents.
Property fund managers are spending increased sums monitoring the
financial strength of existing and potential tenants.
Property fund managers are having to hold cash to cover
redemption’s from investors who are only now realising their investments.
Although the yield which these (usually unregulated and
uninformed) commentators are positive about is indeed in the region of 7 to
8%, the average commercial property vacancy rate is 12.9%.
The yield will come under pressure also from several of the items
mentioned above.
The best predictions from the fund managers themselves is that the
rate of decline will slow over the next few months.
Hope that helps.
As always please contact me to discuss further the options
Richard Smith
0845 226 9106
