Reply to: Friends Provident locks exit from £1.2bn property fund

[IR35 Avoider]

And now that I've hopefully got the topic back on course...

I've been almost entirely invested in commercial property since forever. In the late summer I got out of unitised property funds, where most of my money was. In total I am currently seeing 10% loss on the peak value of my investments, though almost all of that loss occurred in the closed-end funds I invested in via my ISA. Following the 40%-in-one-month crash in closed-end funds I'm shifting my money that was in unitised funds into closed-end property funds.

I measure my investments by the annual income I think I can safely take from them, not their capital value. Although capital values are down 10% from the peak, future income has risen by a third, so I see myself as actually better off now.

AtW makes a good point, that the crash in closed end funds might simply be a predictor of what is going to happen to underlying property valuations in the near future. However, given that what I care about is the rental income stream, which is more or less guaranteed for the several years a typical lease has left on it, I figure I don't care what happens to capital values. (I am probably kidding myself a little on that score, though.)

[ratewhore]

Hang on, the original post (which I only skimmed) was about a property fund, these only invest in commercial property, and that is a completely different asset class from residential property, which they don't invest in. Every post in this thread has been on a completely different subject to the one that set it off.

yours included...

[IR35 Avoider]

Hang on, the original post (which I only skimmed) was about a property fund, these only invest in commercial property, and that is a completely different asset class from residential property, which they don't invest in. Every post in this thread has been on a completely different subject to the one that set it off.

(OK, the subprime crisis may affect both, but (like interest rates) that's a factor that affects everything, so that's hardly an argument for saying the two have something in common.)

[AtW]

What's having a Masters in finance got to do with anything connected with house prices.

I got MSc in Real Estate, no tulips

[TimberWolf]

What you need is a masters in Crystal Ball gazing

I havn't got one of those, so second best will have to do

But I agree with the sentiment.

[tim123]

What's having a Masters in finance got to do with anything connected with house prices.

What you need is a masters in Crystal Ball gazing.

I also got out and now have my money in cash. Renting was cheaper than buying, so I rented.

Not sure what the pound will do on global markets, but currently I am somewhat protected from that by being paid in Euro.

But I wouldn't go near the housing market, in any country, for at least 3 years.

tim

[Signo_cypher]

Changing market

Things are definitely changing in the market place. I'm in the process of trying to buy a property and the valuation from the bank is £13,000 less than the asking price. Seller is seriously not happy!! Thing is he wont even meet half way on the difference. He is adamant the property is worth the initial asking price. Looks like he may need a reality check.

[xoggoth]

I had 50% of of one my pension funds in that until recently. Timed it right for a change.

[bobhope]

£ is begining to tank now too...

[rootsnall]

Next year is going to be tough, could be next 2-3 years or even more.

Once it goes into reverse ( it already has ! ) then I think it'll have some of the same momentum going down as it had going up and it'll be tough to stop. I reckon five years minumum to work off the current excesses !?

[DimPrawn]

The crash is here.

A few months ago everyone was desparate to get on the property ladder whilst they still could, now they are clambering to sell whilst they can still make a profit.

Good luck.

[Lockhouse]

My BTL is on the market now - I was realistically hoping for 325 but will let it go for 305-310 just to get shot of it. I'm then planning on putting all the money in the € or $ for the next 12 months or so. Not decided yet.

[ratewhore]

I've just bought a house. I think I'll be OK because I got 10% off the asking price and it's a 4 bed in the M4 corridor. It's also a home, not an investment so I'm not that bothered about the short term.

Plus of course, I'm a contractor so my mortgage will be well reduced in a few years time...

[sunnysan]

Yes

I have sold up and banked as I said a while ago.

Really depends on your circumstances

I look at it like this

I live in central london. The prices of flats are falling. I sold mine in June which was as high as it was going to go(Admittedly I only say that with hindsight)

In my circumstances it was cheaper to rent in the area than to buy again and the prospect of capital gain was scant. Also there is a downward trend with rents at the moment as well for some reason (This is a mere observation more than research and applies to my local area(E2 sh1thole))

I also considered my primary residence an investment rather than a home so I made the decision according to that factor as well.

However there are problems with this as well.

So my main asset now is sterling. I anticipated that interest rates would go up, but with drops in house prices and possibly the slashing of prices for consumer goods to increase sales, this shower of sputum we call our government will reduce interest rates further.

I am not economically literate enough to give a sound opinion on whether that is a good thing but in my position higher interest rates would directly benefit me.

The other trend I need to consider is devaluation of sterling. I predict it will devalue against other major currencies so if I have a stash of pounds it could devalue in a global sense

So I dont know

Merry Xmas

[AtW]

Well, I don't want to give advice what you need to do, but I can say that if I owned house in the UK right now I'd try to sell it and pocket the profit. Next year is going to be tough, could be next 2-3 years or even more.

As usual those with cash will be able to handle crysis better and there will be opportunities for them to invest well, but it could, and early indications seem to suggest, that the Govt and BoE will go for inflation option rather than recession, so those with cash might find it being devalued for the sake of devaluing debt of those people who overstretched themselves.