Property sector doubles cash amid industry's liquidity crisis

Political uncertainty causing concerns

Managers in the IA UK Direct Property sector have boosted their cash holdings substantially since the beginning of the year amid mixed investor sentiment towards the sector related to political uncertainty, and regulators keeping an eye on liquidity levels.

Average cash holdings as a percentage of portfolios in the IA UK Direct Property sector have more than doubled from 10% in January to 20.5% as of 30 June, FE data shows. The cash positions have been steadily growing since the days after the 2016 EU referendum, when several funds in the sector were forced to suspend withdrawals as investors raced for the exit. In July of that year, the sector held an average 8.2% in cash. Regulatory pressures Much of the pressure to keep elevated cash levels is coming from the Financial Conduct Authority (FCA), which has made it clear it is monito...