Investors divided over commercial property

Nia Williams

February 5, 2010

The latest F&C investment poll shows 52.5% of respondents saying now is a good time to invest in commercial property and the remaining 47.5% taking the opposite view.

While several of those commenting said they expected the commercial property market to stagnate over the coming year, some took the view that property was on the up, and others said they had already invested and intended to remain so. One commented hopefully: “I’m praying it’s also time to invest in residential as well”.

Recent figures produced by F&C REIT Asset Management, which manages F&C’s range of commercial property investment trusts, suggest that there is further capital growth potential in commercial property, with valuations still a long way off their peaks despite recovering strongly in the latter part of 2009. However, many investors are attracted to property because of its potential for income generation.

Mike Woodward, head of investment trusts at F&C Investments, commented: “It is perhaps unsurprising that opinion is so split on this issue. Commercial property values got ahead of themselves in the few years before 2007 but the sector has been hit harder than many since the onset of the credit crunch. The recent recovery in commercial property has been greeted by some as a return to normality, but others understandably fear that the easy money has been made. Our property fund managers are cautiously optimistic on the outlook for 2010, but there remains the possibility of a further downward leg.”

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