Commercial property funds 'fall out of favour'

12 December 2007 / by None
In recent months the popularity of commercial property as an investment class has begun to decline, it has been claimed.

New Star claimed that there has been a "shift in sentiment" towards the commercial property market since the summer, which has resulted in fewer transactions within the sector.

Consequently, there is also a reduced level of liquidity within the commercial property sector - a development which the firm suggested has affected property funds.

"In recent days sentiment has deteriorated sharply, partly as a result of the publicity given to redemptions from open-ended commercial property funds," New Star commented.

This in turn has seen additional redemptions and prompted concern over the liquidity of such funds, it added.

However, the firm claimed that its own UK Property Unit Trust continues to be "one of the most liquid" open-ended commercial property funds available.

Meanwhile, Jones Lang LaSalle stated that commercial property transactions have fallen significantly, Thomson Financial reports.

The firm estimated that overall total UK investment in the sector is likely to reach £48 billion this year.

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