Property companies have been marked down sharply and when property funds stop investors taking out their money, that sends a scary message. But there are some important balancing factors:
1) Most quoted property companies have much stronger balance sheets than they did in the 2008 meltdown. The loan to value ratio of the sector’s big three is around half what it was then.
2) Big deals are still being done for quality properties e.g. Wells Fargo spending £300million on a new City HQ; Debenhams store in Oxford Street being sold for £400m.
(The old adage remains true -ALWAYS stick with quality in a downturn!)
3) Property rented out to good quality tenants still produces a great return (yield) for very little risk. Again note the word ‘quality’.
Chris Ingram 12/08/2016