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ClosePip is cautious on UK commercial property

ClosePip, the property fund of funds managed by Close Investments, will hold stakes in two new property funds that the company plans to launch later this year.

Close Investments is reducing gearing levels in ClosePip’s underlying funds and increasing liquidity by selling some of its UK commercial property holdings. It says UK commercial property is a core sector for ClosePip but market conditions are changing due to a slowdown in the last 12 months.

Double-digit returns from the sector have been replaced by high single-digit returns but Close Investments says it will always have some exposure to the UK within ClosePip.

The company believes there is now more value in the UK residential and European commercial property markets so is keen to increase ClosePip’s exposure to these areas. It says its plans to launch two new funds investing in these areas are well advanced.

It expects to open the European commercial property fund to retail investors in early October but ClosePip will be investing before this date.

Chief investment officer (property) Peter Roscrow says: “We have been making selective property disposals across the funds to increase liquidity. We have sold about £300m of stock in the last 12 to 18 months. If there is a bigger market correction in the UK commercial property market, we will be back into it like a shot. There is a market correction under way in the sector but we feel it needs to go a bit further before we are comfortable buying.

“We are expecting to open the European commercial property fund to the public by the beginning of October but in the meantime we are feeding it with assets.”

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