An analysis by Castle Trust has revealed that commercial property funds in the United Kingdom have lost 11.4% of their value over the last five years.
The analysis looked at 42 IMA Property Sector funds, of which 14 were entirely UK focused. Of those 14, the best performing fund yielded just a 1% return, while the very worst handed investors a 26.6% loss.
The poor performance of commercial property has led many advisers to turn their attention to the UK’s residential property market. This is backed up by a recent survey which showed that 34% of advisers believe they will receive more interest in the sector over 2013, as residential property displays signs of recovery.
Investors have historically found it challenging to enter the UK’s residential property market, since it is largely dominated by buy-to-let investors.
John Moon, managing director of Edison Ford in Bath commented, “There are always exceptions but I would not put a lot of my money in commercial property at the moment.”
Mr Moon pointed out that residential investments could be solid but were dependent on the area of the property. He emphasised that residential property investments should be viewed in the long-term, and should offer “sustainable yields”.
If you are investing in commercial property then take a look at our commercial property owners insurance. Many of our clients are aware that residential property appears to be one of the safer bets as the UK looks to exit from the recession.
Visit our main website page for more information of how to protect your investment with our range of standard and non-standard property insurance products