Insurance News Archive

Fund acknowledges commercial property price drop

Falling commercial property prices in Britain have lead one fund to cut the redemption price of its units.

The Schroder Exempt Property Unit Trust cut the redemption price of units by 12.5 per cent relative to the fund manager's September valuation.

"The market has moved and there is nothing to be gained by us putting our heads in the sand and pretending otherwise," the firm's head of property, William Hill told Reuters.

According to the firm, the UK commercial property has dipped to about 10 to 15 per cent below its peak.

However, it is difficult to get a clear idea of exactly how the market has changed as there is a dearth of transaction-based evidence as exchanges have slumped.

But despite the downturn, Hill sees evidence that the sector is treating the crisis realistically, which may help the recovery.

"I am encouraged that there are signs that the industry is not in denial and that once the market adjustment has been made there is every prospect of liquidity returning," Hill said.

26 Nov 2007