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Commercial property prices could fall 20% after EU vote

UBS brokers say Brexit clauses are being triggered in property transactions, causing some deals to fall through.

Fund managers are being warned by the City regulator not to embark on fire sales of office blocks and shopping centres to meet the demands of customers trying to cash in investments from property funds.

Since the EU Referendum on the 23rd of June, more than six commercial property funds have taken steps to adapt to the changing economic backdrop. Some have prevented customers withdrawing their cash by suspending trading; others have announced fund devaluations, including Aberdeen Asset Management, which devalued by 17%.

The Financial Conduct Authority (FCA) reissued guidance to remind the investment industry of their duty to treat all customers fairly – including those who want to remain in a fund.

“It is the duty of the fund manager to ensure that assets are valued fairly and accurately and to ensure that any subscriptions or redemptions of units take place at a fair price. Failure to do so may lead to some investors gaining at the expense of other investors in the same fund,” the FCA said.

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