Even so, property equities are pricing in a recovery before one has properly started. The FTSE 350 Real Estate Index, which was demolished in the slump, has nearly doubled since March as the relief rally washes over the sector (put simply, stocks are no longer priced to go bust).
Think shares in the major real estate investment trusts (Reits) are overpriced? Then you will probably baulk at the “hope value” priced into the new wave of listed property opportunity funds created to buy in at the bottom and sell out at the top.
Fast becoming more sophisticated, real estate bankers say that up to five new listings are touted to hit the market before Christmas, including one seed-funded with £400m of property let to Tesco.
Alternatively, investors may be tempted to stick cash in a privately run property fund, which promises eye-watering returns from buying “distressed” assets (there’s a new one launching every day, it seems).
Or perhaps, now the market seems to have stabilised, the contrarian merit of buying units in an open-ended property fund, or listed property trust is more appealing?
Whichever route investors take to gain commercial property exposure, remember this: to understand the investment opportunity, first you must understand the problem.
