Sector23 Aug 2009 12:10
IFAs return to commercial property after two year break
Professional Adviser| 20 Aug 2009 | 14:30
http://www.ifaonline.co.uk/professional-adviser/news/1529496/ifas-return-commercial-property-break
Beth Brearley
Advisers are starting to return to the UK commercial property market for the first time in two years as they believe the sector is bottoming out and they want to take advantage of the high yields on offer.
This week, Standard Life Investments launched an internally-run UK commercial property fund into the retail space in response to adviser demand.
AdvertisementManaged by Nigel Chapman, the £175m Standard Life UK Property fund aims to provide capital appreciation and income over the long-term by investing directly in UK commercial property and is currently yielding 6.6%.
Barry MacLennan, SLI's investment director of mutual and life funds, says the outlook for UK commercial property has improved significantly, with the IPD UK Monthly index posting its first positive total return in two years last week. The difference in property yields versus 10-year gilts is also currently at its largest on record at 4.2%.
"We have seen a trough in the UK commercial property market and there are a number of triggers continuing to support the environment," MacLennan says.
"In May and June several big property companies conducted rights issues, meaning there is a large amount of cash on balance sheets waiting to be invested, while the lending envir