Fears about UK commercial property following last week’s fund suspensions appear to be overblown with buying opportunities in several real estate investment trusts (Reits), according to UBS.
While still expecting the sell-off to knock around 20% off the value of London offices, 15% off UK retail and between 5% and 10% off London retail and industrial, the bank’s head of European real estate Osmaan Malik recommended picking up undervalued Reits.
In a note to investors, he wrote, ‘Property funds have nudged valuations down 5-10% and closed to redemptions,’. ‘The long-term demand picture in London is uncertain. While the direction is down, we see a number of factors that should mitigate the impact. The global search for yield continues to exert a bid for real estate, with implied yields of 5.5% backed by 7-10 year average lease length.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.