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ClosePip seeks more exposure to Europe

by Amanda Newman

Close Investments says its property fund of funds, ClosePip, will take a position in the company’s new Close mosaic property fund.

ClosePip was established in 2003 and comprises income and growth portfolios which invest exclusively in Close property funds.

The Close mosaic property fund, which has a target return of 12 per cent a year, invests in property in central and Eastern Europe. It will target properties valued between euro 1m and euro 30m because Close says there is less competition in that price bracket. Properties within this range are considered too expensive for private investors and too small for institutional investors.

Close Investments is in the process of ironing out a few legal issues in relation to holding the new fund within ClosePip but expects to resolve these shortly.

The company believes that strong economic growth in central and Eastern European countries that are about to join the European Union will have a positive impact on property markets. It says changes taking place in these regions, such as a developing infrastructure and industrial privatisation, have increased demand for property investment and yields are more attractive than on properties in Western Europe.

This view contrasts with that of Baring Asset Management’s multi-manager team, which will not hold Eastern Europe in its property fund despite falling UK property yields forcing managers to explore international opportunities. Barings will contain its European exposure largely within Western and central regions such as Germany, Spain and France as it says emerging Europe is too risky.

Close Investments head of marketing, property and tax Mark Hutchinson says: “ClosePip does not have much exposure to Europe at the moment and the investment committee will be recommending that ClosePip has some exposure to the mosaic fund.

“The investment committee will decide on the exact weighting but it is likely to be only a small holding.”

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