Friday, Jan 18, 2008
Music to my ears
Guardian: Panic selling shuts £2bn fund
One of Britain's biggest property funds was forced to shut its doors to withdrawals yesterday after the slump in commercial prices triggered panic selling by small investors.
Posted by inbreda @ 09:18 AM (604 views) Add Comment
5 Comments
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1. techieman said...
Quite old news this - it boils down to the commercial property market nosdiving, people wanting their money for liquidations and the funds being unable to liquidate quickly enough to pay 'em. There have been a few instances of this already. It just illustrates that the real problem with property is how illiquid it is.
2. techieman said...
Quite old news this - it boils down to the commercial property market nosdiving, people wanting their money for liquidations and the funds being unable to liquidate quickly enough to pay 'em. There have been a few instances of this already. It just illustrates that the real problem with property is how illiquid it is.
3. Andrew said...
I suppose anyone that is still in doubt about how quickly a market can turn should read this article.
If the value of the fund's assets have fallen so fast, what investor in their right mind would buy something that has dropped in value by 15 - 20% in 6 months and is still falling in value - fast. Where are the buyers going to come from ?
Just think, in about 6 - 12 months time this could be what happens to Residential up and down the country.
4. inbreda said...
At least we're both being repetitive!
5. drewster said...
As the article says, it's a Northern Rock-style run. The difference is that (a) the fund doesn't have high street branches with media-friendly pictures of people queuing up; and (b) the government doesn't guarantee 90% of the first £30,000 of your money - there are no guarantees with a property fund.
@techieman - On the liquidity issue: When the market is rising, liquidity isn't a problem. If you want to get out you can easily find a "greater fool" to buy your share. It's a different story when the market is falling - there is suddenly a shortage of greater fools.