The big question on everyone's lips seems to be when to go back into commercial property, I'm worrying about how we're going to avoid repeating the mistakes and naïve advice of the last three years.
Sure as ‘eggs is eggs’, the rapid falls of the last six months will sooner or later be followed by equally rapid rises. And, if the industry doesn’t do more to push adviser education about the dynamics of property as an asset class and how to read the information coming out of the market, then maybe next time the threats of misselling will have a bit more substance.
In my role, I am naturally keen to see the development of REITs regimes across different countries, but a shiver ran down my spine recently when the spectre of EU REITs raised its ghastly head again.
The prospect of Brussels bureaucrats intervening to ‘speed up’ the development and convergence of national regimes, seems more likely to set back the cause of tax-free property investment by 20 years, than to produce a workable solution to a real market need.
Falling markets always attract vultures and headlines abound of billions being raised to take advantage of forced selling and bank foreclosures. We haven’t seen many stories of completed deals and I think it’s unlikely that we will do so soon. A much wiser man than me, one who’s actually paid for his opinion, reminded me recently that in the last downturn the smart opportunity investors announced themselves only after they had done deals at a knock-down price.
This time around the vultures are effectively having to advertise; behaviour likely to result in sellers having a choice of where to sell and being able to command not so ‘knock down’ prices. My friends at a couple of the offshore investment companies have been reminding me recently of their virtues, particularly the benefits of high income returns and REIT like qualities. I buy into all of this - but where I keep getting stuck is what to call them.
It’s bad enough talking about REITs (and reminding people that they rhyme with FEET) but finding an acronym for Guernsey or Jersey Investment Companies that’s snappy and doesn’t rhyme with something rude is currently beyond me – no prizes but all suggestions welcomed. A REIT by any other name or GICs and JICs forever!
Dave Butler is head of external affairs at Reita
The views expressed in this blog are the individual's own.
December 2018 or early 2019
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