From tragedy to triumph – the investors’ darling stages a comeback
Before the financial crisis, commercial property funds were the darlings of retail investors. Relatively low volatility, coupled with strong capital growth, led to years of robust returns.
At the height of its popularity in 2006, the IMA Property sector enjoyed a staggering £3.6bn in sales. However, the notoriously illiquid asset class came a cropper when the credit crunch hit.
According to figures from the IPD UK Monthly index, between June 2007 and July 2009, British commercial property values plummeted by an eye-watering 44 per cent – the worst hit it had witnessed since its records began.
As investors in their droves went to cash in their chips, many funds had to impose lock-in periods to stave off a Northern Rock-style run on assets.
However, post-crisis and on the back of the improving UK economy, the asset class has reappeared on the radar.
According to figures from the IMA, commercial property funds notched up total net sales of £423m through the whole of 2012. By the end of 2013, this had more than tripled to £1.5bn.
This May alone, £491m of net new money went into property funds, sending the sector to the top of the sales charts.
The following month, with £316m of net new money, the category came second to UK Equity Income fund sales as the focus moved to the biggest fund launch ever, of CF Woodford Equity Income.
