The UK commercial property fund purple patch is over and switching to a global approach is delivering more favourable returns, Chartwell says.
Investment director Craig Wetton says investors should expect UK funds to fallback to historical norms.
It follows Standard Life’s announcement it has cut the unit prices of five of its property funds by 6.7%, as a result of cash flow problems.
“A lot of UK funds were flushed with cash and they had no alternative other than to take on properties they probably wouldn’t have otherwise,” Wetton says.
“When they don’t deliver upon expectations, too much cash is taken out and we see examples like Standard Life and Prudential.”
Wetton says the retail market has been slower in picking up the trend, compared with the institutional sector.
“The high levels have been around for two or three years and UK commercial property value is coming back to more historical levels,” he says.
“So we have been aggressively shifting focus to European markets, especially Germany, and the Far East”
Wetton says while UK commercial property is not attractive in the short term, as with the property sector as a whole, investors will still find long term value.
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