The current commercial property recovery is not being driven by fundamentals and could be short lived, according to HSBC Open Global Property fund manager and head of multi-manager Guy Morrell.
He says there are signs the UK commercial property recovery is in danger of being the “wrong sort” and warns investors against taking an over-optimistic view on rental values. “For an illiquid asset class like direct property, it is particularly important to understand the drivers of performance,” says Morrell. In particular, he points to weak occupier markets which show rental values have fallen by 8.6% over the past twelve months and void rates increased to 12%, compared with 9.3% last year. “Given the lagged impact of the underlying economy on property occupier decisions, we ca...
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