Short-term concerns over commercial property market

Managers are growing increasingly cautious on short-term commercial property markets, with Ignis the latest to warn investors of a potential drop in capital values.

Ignis issued a briefing note to investors in its £510m UK Property fund last week. It advised of a potential short-term disconnect between capital value growth and rental value growth, saying yields for prime stock ran the risk of over-correcting in the short term leading to a moderate retrenchment in capital values. Last week Jupiter’s Philip Gibbs told Investment Week he has opened up a net short position on “overvalued” UK commercial property stocks in his new Absolute Return fund, while Threadneedle UK Property Trust manager Don Jordison has also warned of difficult times ahead in th...