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Commercial property set to dive By Jeff Salway
With investors getting nervous about commercial property, the doomsayers are predicting an end to the sector's bull market. They could be right - except the highs it reached were unrealistic in the first place.
But experts say that in an illiquid sector, exit fees were always on the cards, and returns have merely fallen to normal levels. "It was overvalued," says Juliet Schooling, head of investment research at Chelsea Financial. "Managers are struggling to pick up good value property as the money out there is pushing prices too high." Unrealistic expectations Historically, commercial property has been considered a bond-style asset offering income and diversification, but recent high prices have seen the sector take on equity-market characteristics. That's why Schooling believes that the steam being taken out of the sector's run is no bad thing. "It's a diversification buy and investors should be in it for the long term. Big gains saw them pile in with unrealistic expectations." If you're nervous about UK commercial property, though, you could look overseas, particularly for low-risk income. Simon Critchlow, director of European property fund manager Seven Dials, says: "The key to successful investment is diversification, but holding 100% of your commercial property in your home market isn't enough."
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