Do I have any?
If you have holdings using any of our model portfolios, the answer is NO. Most investors (generally) do, but I have long held the view that investors need to be able to get out of holdings quickly if they need to. The last credit crunch saw the same problem, with one fund in particular closed for many months. So I took the view (with investment committee agreement) that this was not an asset class that I wanted our clients to hold. There are alternatives (which we use). This will mean we missed some of the favourable returns that commercial property it has provided, but it has also meant we have avoided problems like this.
Is there a problem?
To be blunt, this is largely fear and sentiment due to uncertainty. All predictable – depending on your point of view about “Project Fear”. These things happen. In reality it really means that new tenants into commercial property will rethink, until there is more certainty. There are of course knock-on effects to those connected to the commercial property market – surveyors and an endless list of people that are involved. At this point I am not worried, you shouldn’t be. Economics suggests if there is no new property, supply is limited, thus price ought to rise. This forgets that sentiment plays a considerable part in economic theory of supply and demand.
Will it spread to residential property?
When there is stress, there will always be an opportunity and opportunists. Anyone that has moved house will know that a property purchases are an enormous headache, there isn’t enough of it anyway, so it is hard to see a logical reason for price reductions. However, we do know that property valuations defy logic. A house is meant to be a home not an investment, but many will disagree with me on that.
I remain watchful. You need not panic, in fact it would be rather pointless to do so. We can only control a very limited number of things in life, our response is one of them.
You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email firstname.lastname@example.org