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Realistbear

Sunday Times: " Britain’s Hidden Property Slump"

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http://business.timesonline.co.uk/tol/busi...icle2075128.ece

Now the goddess Prudence rises to smite the fecklessLibby Purves

The Sunday TimesJuly 15, 2007

Britain’s hidden property slump
While all eyes have been on the housing market, funds that invest in shops and offices have been losing money, prompting a wave of INVESTORS are being warned of a property slump in which the prices of shops and offices could drop by up to 20%.
The downturn would threaten the savings of hundreds of thousands of people who have been lured into commercial property funds in the past few years...../
The firms said last week that the value of the shops and offices in their portfolios had not in fact fallen; returns are down because they also hold some commercial-property shares, which have plunged by more than 20% this year.
Many analysts think it is only a matter of time before the
value of bricks and mortar falls too
, though. Capital Economics, a con-sultancy, predicts that prices will slide 12% over the next three years, with a slump of 20% a distinct possibility...../
The sell-off comes amid fears of a global property crisis. America is suffering a sub-prime mortgage meltdown, with nearly 2m people behind with their repayments. Last Tuesday the FTSE 100 index shed 100 points on fears it could spread to Britain – though it ended the week up 0.4% at 6,717.
The Royal Institution of Chartered Surveyors (Rics) also reported the first real signs of a
housing slowdown in this country, when it said price growth halved in June.
Advisers are drawing parallels with the tech boom of 2000, when investors were lured in just as returns peaked – although property funds are unlikely to suffer such a severe fall.
What the slowdown means for you
THE sell-off in commercial property funds, coupled with the crisis in the American mortgage market, has sparked fears that the global property market is heading for trouble, writes David Budworth.

Sunday papers a bit bearish again.

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http://business.timesonline.co.uk/tol/busi...icle2075128.ece

Now the goddess Prudence rises to smite the fecklessLibby Purves

The Sunday TimesJuly 15, 2007

Britain’s hidden property slump
While all eyes have been on the housing market, funds that invest in shops and offices have been losing money, prompting a wave of INVESTORS are being warned of a property slump in which the prices of shops and offices could drop by up to 20%.
The downturn would threaten the savings of hundreds of thousands of people who have been lured into commercial property funds in the past few years...../
The firms said last week that the value of the shops and offices in their portfolios had not in fact fallen; returns are down because they also hold some commercial-property shares, which have plunged by more than 20% this year.
Many analysts think it is only a matter of time before the
value of bricks and mortar falls too
, though. Capital Economics, a con-sultancy, predicts that prices will slide 12% over the next three years, with a slump of 20% a distinct possibility...../
The sell-off comes amid fears of a global property crisis. America is suffering a sub-prime mortgage meltdown, with nearly 2m people behind with their repayments. Last Tuesday the FTSE 100 index shed 100 points on fears it could spread to Britain – though it ended the week up 0.4% at 6,717.
The Royal Institution of Chartered Surveyors (Rics) also reported the first real signs of a
housing slowdown in this country, when it said price growth halved in June.
Advisers are drawing parallels with the tech boom of 2000, when investors were lured in just as returns peaked – although property funds are unlikely to suffer such a severe fall.
What the slowdown means for you
THE sell-off in commercial property funds, coupled with the crisis in the American mortgage market, has sparked fears that the global property market is heading for trouble, writes David Budworth.

Sunday papers a bit bearish again.

Still reasonably upbeat at the end!

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This week's Investor's Chronicle is very dark about commercial property...

"Fund woes add to property gloom....

There seems to be an obvious inconsistency in offering property, an illiquid asset, through an open-ended fund that promises its investors the opportunity to cash in and cash out at will. And, this week, with sentiment towards commercial property low, the problem has shown signs of coming home to roost. In response to fund outflows, four fund managers - Standard Life, New Star, Norwich Union and Prudential - have reduced the amount investors will be paid when selling units in their open-ended property funds."

The article goes on to say this could cause a stampede of investors trying to get out now, and the possible damage caused to the property market by distressed selling.

Its hard to find any news publication with anything positive to say about any aspect of finance and property these days

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I currently rent an industrial unit 1250 sq/ft unit off our council for £391 p/m. I'm moving in 2 weeks to a private unit 2498 sq/ft with use of the yard and a better location for £400 p/m, thats including electric and water.

Edited by ripandcap

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I assume that a lot of property funds money will end up in equity funds. Does it mean a rise in FTSE? Or if this rise has been small instead and it has already happened, does it mean that FTSE is due for a fall once the effects wear out?

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very good friend of mine is married to a relatively big cheese in the Leeds commercial property game. Saw him yesterday, full acknowledgement that the rough times are here. They also can't even get any viewings on their flat (not new-build).

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Nothing to worry about, according to David Smith in his column in The Times. Just like every other Sunday, he asks the question will there be a crash in property/assets/stock market, and as usual concludes No, that couldn't possibly happen we will instead continue to defy all logic for ever more and have a forever flat or positive market.

Theres a lot of paranoia about government, banks, and others not wanting a crash and therefore engineering prices to stay high. However, I would have thought, for banks, that a crash would enable them to make lots more money and therefore is in their interest to engineer exactly that.

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Guest Bart of Darkness

"Fund woes add to property gloom...."

Seems to be a lot of that about lately, still I'm sure things will pick up in the Spring.

The Spring of 2014 that is.

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