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Midas remains cautious on UK commercial property

Midas Capital predicts further declines in UK commercial property prices and will continue to exclude this area from its portfolios.

The company sold out of UK commercial property at the start of the year in favour of property holdings in Asia and Europe. It is content to avoid the UK despite some of its overseas holdings having been caught up in the recent sell-off as investors scrambled for liquidity.

Midas believes the fundamentals of its overseas property holdings remain attractive although the price of some assets has fallen significantly below net asset value. This is due partly to forced selling by hedge funds but if Midas’s view is correct and prices increase, investors could reap the rewards.

Further falls in the price of UK commercial property assets would not see an automatic return to the sector by MidasHead of business development David Thomas says: “I do not think it is automatic that after a given level of falling prices we would go back into UK commercial property. We are content not to be invested in UK commercial property and are pretty convinced that valuations will fall but the degree to which this will happen remains an open question. Any decision to reinvest will be based on circumstances at the time and any other opportunities available.”

The company says its general outlook across asset classes has shifted from cautiously optimistic at the start of the year towards a more cautious and less optimistic view in light of the credit crunch.

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