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Liquidity issues stall UK property fund rebound

Advisers have warned that the size of the liquidity problems faced by some UK property funds means it may take longer for them to start performing again.

A number of providers believe the commercial property sector is bottoming in the UK and have also highlighted a steady yield for investors.

However, Hargreaves Lansdown head of research Mark Dampier says although we may have reached the bottom for property, there is no rush to go back in.

He says: “The situation may have improved but it could take several property funds two or three years to rebuild their portfolios as some have been forced to sell their bigger holdings at a knockdown price to reduce liquidity problems. It is like selling all the blue-chip stocks in an equity fund and going for a small-cap run.”

Skerritt Consultants head of investments Andrew Merricks adds: “I would agree that is the case for more traditional commercial property funds as they are likely to have legacy issues.

“I would look at new launches and smaller, nimbler property funds as new money is likely to come into the sector.”

Henderson New Star director of UK property Marcus Langlands Pearse says it will be down to the IFA to do research on individual property funds. It will depend on every case. We sold four large buildings with high rent in the city but that was a tactical move. The buildings we have left are of good quality, with an average lease length of 10 years and tenants of the highest quality.”


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