The Brief: Property funds will have to sell offices and warehouses to meet pressure from redemption requests after the havoc caused by the government’s mini-Budget last month, according to The Financial Times. Commercial real estate buyers will be on a buying spree for properties below market value.
Why It Matters: Investors with more cash and a preference for large assets will take advantage of discounted properties forced to the market.
Finanze® Foresights: Property funds are in a hurry to get back their cash after many pension funds sold assets to meet margin calls last week. But the chaos doesn’t stop there. Commercial property prices are now being dragged down by soaring mortgage costs that are above rents, forcing owners to unload properties to the market. The buyers that will most likely flock to the market for these assets will come from overseas whose purchasing power is supported by a weaker pound. We expect more commercial real estate to hit the market next year when other commercial mortgage holders are set to refinance but can’t handle their large credit spread.
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