More concern about direct property
Specialist research house Property Investment Research (PIR) has added weight to growing industry concerns that super funds and other investors heavily committed to direct investment will face a significant correction.
In an analysis released this week, PIR said that given the current investment climate, a likely result of the credit crunch was “a potentially significantly correction in property values and a general re-pricing of risk”.
The PIR analysis said that the managers of wholesale funds would be truly tested for the first time in 15 years and it was anticipated that even the best of breed could post relatively poor returns placing them under considerable redemption pressure.
The analysis went on to say that there was currently sufficient uncertainty in the property markets that obliged any investor or adviser to insist on obtaining a current independent specialist report on all unlisted property funds held in a portfolio.
“Furthermore, superannuation funds have an obligation to their members to carry out proper due diligence on their asset managers and conduct regular independent reviews of their investments and performance,” it said.
The PIR analysis said that many of the properties purchased in the past few years might have been driven by excessive demand and therefore relatively over-priced with sub-optimal portfolio fit.
AUTHOR
Mike Taylor
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