The upsurge of private investor interest in property is prompting Schroders to open its propert...
The upsurge of private investor interest in property is prompting Schroders to open its property unit trust to the retail market.
Schroder Emerging Retail Property Unit Trust (Serput) is an unauthorised vehicle and the group is planning to turn it into a Jersey-based unit trust to make it more widely available.
Tom Brown, manager of the fund, said: 'With interest rates so low relative to yield on property, many private investors are gearing up and buying into the asset class. Higher lot sizes are being sold, with many investors clubbing their money together and forming small property companies in order to buy them.'
Brown said that property auction houses are doing exceptionally well at the moment, and that the market is the most active he has seen it for some time. All types of commercial property are in demand, with investors looking at what yield they can get on the property and what type of tenant they can get to occupy it.
Institutional investing in property, which has been very quiet in two out of the last three years, is also seeing large numbers of purchases again, said Brown. 'Lot sizes are bigger and portfolios of property have sold very well recently,' he added.
Schroders is not the only group that is responding to interest in the asset class and Brown noted that the recent Scottish Widows property fund launch was oversubscribed.
Any changes to Serput would be subject to regulatory approval and Schroders expects to make a public announcement on the matter this month.
'The concept is there, but things are not quite finalised yet,' Brown added.
The £70m fund has unauthorised unit trust status, making it available only to pension scheme and charity fund investors. Schroders wants to market the fund to retail investors, and moving the fund offshore would enable this to happen without jeopardising existing investors' current tax efficient status.
Serput is a specialist investor in retail. It looks for opportunities to buy the freehold of retail properties in up-and-coming areas of big cities, such as Streatham in South London, that are undergoing change and are gaining favour with the more affluent sections of the population.
The increase in minimum AE contributions has had little impact on opt-out rates - with cessations after April increasing by less than two percentage points, data from The Pensions Regulator (TPR) shows.
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