Is it time to move back into commercial property?

Intermediary views

Among intermediaries, Hargreaves Lansdown was a long-term property bear but began reappraising the sector late last year.

Head of research Mark Dampier notes the income argument, with yields above gilts suggesting property is at its cheapest levels since the 1990s.

He stresses commercial property should not be bought for the short term but investors with a five to 10-year outlook might dip a toe into this market again.

Elsewhere, Darius McDermott, managing director of Chelsea Financial Services, remains cautious, seeing property as a function of the prevailing economic climate, which is clearly weak at present.

‘The UK market was the most oversold and offered good value last year, but after a 14% rally, perhaps the easy money has been made,’ he said.

‘Several commentators highlight the yield story on property and the IPD’s current 6% is obviously attractive against 0.5% base rates. That said, most funds offer less than this, with fees and having to hold part of the portfolio in cash, so the argument is not quite as clear cut.’

McDermott said most managers are reasonably positive on the sector but noted SLI currently has no property in its own multi-asset Global Absolute Return Strategy (Gars) fund.

‘The group highlights several triggers to be constructive on the market but is waiting to add property into Gars until the expected market lull is over,’ he said.

Property fund buyers