By ADRIAN LOWCOCK 15/10/2009
We have been positive about the UK property sector for several months, having been attracted by the higher dividend yields and seeing prices starting to stabilise.
This month, the CBRE Monthly UK Property index and IPD UK index reports state that capital values are increasing in UK commercial properties (although rents are falling). CBRE has seen commercial property record positive returns for the third consecutive month in September, whilst the IPD reported a 1.8% total return for the same month and 3.3% over the last three months. This positive data has encouraged more fund management groups and investment advisers to invest in the sector.
Many of the property investment companies themselves will shortly be announcing their quarterly NAV for the three months to the end of September. We expect that these will show increases, reflecting what has been reported in the benchmark indices (CBRE & IPD).
The share prices of listed property companies have already risen strongly in anticipation of improving conditions but the direct property funds (aka ’bricks and mortar funds’) have not.
The outlook for this sector is improving and with positive news flow providing support to sentiment, we expect fund prices to start to move upwards. With dividend yields still looking attractive we continue to remain positive. Our top rated UK ‘bricks and mortar’ funds are New Star Property and SWIP Property.
If you would like to discuss any of the issues in this article please call one of our Advisers on 020 7189 9999.