The shadow of the property crash of the early 1990s is looming over the industry as deal volumes collapse to a third of their previous level and property funds take further drastic steps to prevent a liquidity crisis. Financial Times
Deutsche Bank was the latest fund manager to alarm the sector as it told investors in its RREEF UK core real estate funds – worth £1.3bn – that they would have to wait up to a year to sell units.
Triton, a £2.3bn property unit trust run by UBS, is also invoking a similar 12-month waiting period whereby some investors could have to wait up to a year to leave.
Investors in Morley’s £1bn pooled pension property fund have also been informed that a redemption period of up to 12 months has been employed.
The crisis of confidence in unlisted property funds comes against a backdrop of an underlying market in which deal volumes have slumped as buyers struggle to get their hands on debt and confidence drains away.
The value of UK transactions for the fourth quarter is set to be about £5bn, according to an estimate by Jones Lang Lasalle. That compares with £15bn in the third quarter and £18.6bn in the fourth quarter of 2006. Cushman & Wakefield said it expected deals during the period to be at about a third of their level from the same time last year.