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Fears over global property fund launches

A wave of global property fund launches is causing concern over the UK commercial property market for investment IFAs.

Hargreaves Lansdown head of research Mark Dampier says global property fund launches by Fidelity and First State are evidence that the UK market is overvalued as firms cast their nets fur- ther afield.

Schroders also plans to launch a global property fund in the new year.

Dampier points to the dramatic downturn of residen- tial property funds Target RP and Henderson Prime in the 1980s, when investors could not get their money out for some time, and Norwich Union’s property unit trust going to a full-bid basis in 1994 as evidence of what can go wrong.

First State was unavailable for comment and Schroders and Fidelity declined to comment.

Dampier says: “I do not know if UK commercial property is not an accident waiting to happen. At every presentation I have been to, these funds are aiming at 10 per cent and people have got stacks of money in these funds now. With groups such as Fidelity and First State going global because the UK markets are overvalued, I do get a nervous twitch. Property may be a wonderful diversifier but I do not want to buy it just at a time when it collapses.”

Bestinvest business dev-elopment manager Justin Modray says: “It looks as if UK property returns are going to be less attractive than they have been of late and the fact that groups are launch- ing overseas alternatives would tend to suggest that they have more faith in those markets than the UK.”

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