Four out of ten financial advisers have an overly optimistic view of the UK commercial property market, according to Reita.
Research by Reita also found 12% of financial advisers do not plan to take higher-level qualifications, despite the Retail Distribution Review (RDR) suggesting they will be necessary.
Reita’s survey of 241 UK IFAs found 40% expect the UK commercial property market to recover in 2008, while 42% thought it would not start to recover until 2009 or later.
However, 58% of Reita’s expert panel believe the market will not recover until at least 2009, with just 27% expecting a recovery this year.
Dave Butler, head of external affairs at Reita, comments: “Clearly advisers are far more positive than the ‘experts’ about the outlook for property this year and perhaps overlooking the potential double-dip effect that the experts fear.
“Whilst falls to date have been in investment values, we are now seeing concerns about weakening on the tenant side which would impact rental income streams - particularly those portfolios which are not focussed on prime grade property.”
Reita’s research also found a significant number of advisers did not feel they had adequate knowledge of property authorised investment funds (PAIFs).
Overall, 67% of those surveyed said they were not well informed about PAIFs.
“From an adviser perspective, PAIFs appear to offer all the advantages of REITs and in a familiar open-ended structure that, unlike direct UK REITs, most advisers are able to advise clients on PAIFs,” explains Butler.
“The fact that so few advisers are informed about PAIFs is perhaps not a surprise given how new they are at this stage, but it is vital that the industry works together to educate advisers further about the benefits they offer.”
Reita’s survey also found a positive attitude towards improved professionalism among advisers, in line with the expectations outlined in the RDR interim report.
The survey found 15% of respondents planned to obtain Chartered or Certified status, while 12% claimed they were already at this level, and a further 25% planned to take the new CII Diploma qualification.
However, 24% of advisers were still unsure about which route they would take to higher-level qualifications, and a further 12% say they have decided not to take any higher-level qualifications, despite the RDR suggesting diploma level will become a minimum requirement for financial advice in the future.
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