Summer 2020 to potentially see UK property funds reopen

June 02, 2020

Typical English street in London as property funds set to reopen in summer 2020

Summer 2020 to potentially see UK property funds reopen

UK property funds could reopen this summer as valuation uncertainty lifts in some sectors by an industry body for independent valuers

The coronavirus measures and valuation uncertainty which resulted in the suspension of UK direct property funds are now showing signs of easing. This is due to more transactions and updated strategies for the sector on property valuations.

The lifting of restrictions combined with the easing of UK government rules means the changes could see funds in the Investment Association UK Direct Property sector reopen by the end of summer.

The industry came to a standstill back in March as independent valuers faced material uncertainty over valuations due to the coronavirus outbreak.

According to Reuters, suspensions have also spread to institutional property funds for the first time.

In an update for investors last week, Janus Henderson Property fund manager Ainslie McLennan said that three assets in the portfolio were no longer affected by material uncertainty around valuations due to an update from the Royal Institute of Chartered Surveyors.

The professional body determined that long-dated income assets with leases of at least 20 years were no longer privy to the clause. For Janus Henderson that represented approximately 4% of the fund, including: Tesco in Hythe, Lidl in High Wycombe and Sainsbury’s in Ripley, Derbyshire.

Fairview Investment consultant, Ben Yearsley, says it is interesting that the guidance around material valuation uncertainty has been reduced in some sectors and gives an indication that funds in the Investment Association UK Direct Property sector could be on their way towards lifting suspensions.

“By July, if things go to plan, all shops would have been able to reopen and I presume they’ll plan for the end of June for restaurants and pubs to reopen.”

Yearsley reckons it wouldn’t take long after that for funds to lift suspensions.

Reuters pegged the lifting of suspensions to happen in September, citing unnamed industry sources.

 

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