Moneyspider in the News
11/02/2008
Black year ahead forecast for sector
Shropshire Star
Investors are being advised to urgently
check with their commercial property fund manager on penalties and conditions
for exiting their funds as conditions for the once favoured sector continue
to worsen.
The Royal Institution of Chartered Surveyors
forecasts a bleak year ahead for the sector following reports that demand
for space in the retail sector is at it's lowest since 2003, and new
data revealing that the market suffered its worst quarterly performance
ever at the end of last year.
It means there is now likely to be a
rush for the exit, said online fund performance data service Moneyspider.com's
Tony Ahearne.
'This is now looking like a sector
in freefall, with total returns - the combination of rental income
and capital growth - crashing 7.6 per cent in the last quarter of
2007.
According to industry benchmark IPD,
it is the biggest fall in history of the index, and it is now looking
highly likely that this downward trend will continue this quarter and
beyond as the retail sector on the high street struggles in the face
of falling consumer demand,' he said.
'Investors will not take any comfort
from that the fact that there is around £12 billion in property derivatives
tied up in the commercial property market, and the IPD data indicates
there will be at least two more years of negative returns.
Many of the major commercial property
funds are slamming the door shut on investors - the illiquidity of
the asset class means that some fund managers are locking in their investors
for periods as long as long as 12 months.
A number of funds are also levying heavy
penalties for early withdrawals - so Moneyspider.com is warning
investors who are unwilling to take a very long-term view of this sector
to find out from their manager what the earliest possible penalty-free
withdrawal date is, and to research alternative investment opportunities.'
And with continuing volatility across
all equity sectors, Ahearne stressed that now is a crucial time to review
private investor portfolios to see where investments might perform better.
'Commercial property is being particularly
badly hit, but a number of other popular equity sectors such as UK All
Companies and North America are also being battered.'
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