Reits do not give best property investment returns, says BCO

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Reits do not give best property investment returns, says BCO

Mon 28th Jul 2008

Property investors are not getting the best returns for their money on real estate investment trusts (Reits), the British Council for Offices (BCO) has said.

Matt Oakley, chairman of the BCO research centre, said the fall in Reits share prices this year is "far, far in excess of movements in income".

He said that someone who had spent £100,000 on commercial property in January 2007 and the same on a listed property company would be "feeling a lot happier" with the direct property investment than the Reit.

A Reit, as defined by the London Stock Exchange, is a company that owns and manages property on shareholders' behalves and allows investors to access property assets without directly buying property.

Mr Oakley suspects the average fall in Reit share prices is "already far in excess of the fall in capital values on commercial property".

The Reita quarterly property investment perspective from May 2008 found UK property stocks to have fallen to their lowest point of the year.

If the analysts are right, Net Asset Values are predicted to fall another 15 to 25 per cent in the current year.

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