So, we have reached the annual halfway point with many in the commercial property sector still waiting for something to happen; some sort of movement. Their request has been answered, albeit movement in the wrong direction!
With a 40% rise in the commercial property sector since 2009, and continual growth up until this year, it would seem the tables have turned.
In the last week we have witnessed the closure/suspension of many property funds. Henderson, Canada Life and Columbia Thread Needle, to name but a few, all ‘gated’ their property funds. Some have speculated that 50% of the UK property funds are now gated as investors withdraw their cash from the funds - largely due to the falling pound.
We will we soon witness a frenzy to “sell, sell, sell” and offload commercial property? If so, will this create that golden opportunity for foreign investors to hunt for those bargains and pick up prize buildings for very little? Surely this is what the property investments funds were actually trying to avoid. By closing the gates they intended to try and stem the market and prevent fire sales.
Morgan Stanley suggest that this might actually be beneficial for the UK “Front-loaded GBP weakness could even be beneficial for the UK, allowing it to generate inflation expectations which, in conjunction with lower nominal bond yields, could channel real yields to low enough levels to support investment picking up.”
Investors, at home and abroad, would do well to stay vigilant over the coming weeks as it is anticipated that more property fund companies will follow suit. With the dust not being set to settle soon, uncertainty prevails.