Schroders, one of the UK's leading managers of commercial property investments, revised the value of units in its flagship £2bn fund downward by 12.5%, as fears mounted of a collapse in the property sector. The company also warned that investors in the fund might have to wait longer than usual to withdraw their money because of a serious downturn in the market and the fund manager is determined not to be forced into selling assets in a falling market.

Another manager, M&G has also told institutional investors they may have to wait longer to get their money back. Forecast annual returns for commercial property are down to almost zero by the end of this year – compared with an 18.1% gain in 2006. The global credit crisis has made it increasingly difficult to find finance for larger projects. These managers have all stressed in recent weeks they do not foresee liquidity problems, though several have this year begun imposing exit penalties on investors selling their fund holdings. In July, August and September, there were net inflows to commercial property funds of £54m, £69m and £62m respectively, which was reversed in October to a net outflow of £159m.

 

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