What happened to property funds?

mroller

I have 2 property funds in my portfolio New Star Property and Aberdeen Prop share, both have tumbled since the start of this year, Aberdeen lost 5% approx.

What's going on? is it something to do with the Reits rules? there has not been a significant volatility in the market

Cheers.

Chrismaths

Yes there has: http://uk.finance.yahoo.com/q/bc?s=LAND.L&t=5d&l=on&z=m&q=l&c=
http://uk.finance.yahoo.com/q/bc?s=BLND.L&t=5d

dunstonh

They are both very different property funds. New Star is mostly bricks and mortar and low risk (5 out of 10 on the risk scale). Aberdeen property share has no direct property and is high risk (10 out of 10 on the risk scale).

New Star Property is stable and hasn't tumbled but dropped a little. This fund is prone to a drop in January (has done so for last few years). It could be that they don't get many rentals in during January or there is a high amount of expenditure for the properties put through in January. Plus only 70% is direct property, there could have been impact on the other 30%. Maybe New Star did some revaluing. It could just be an indication that property is slowing as they anticipated it would this year.

Aberdeen property share is a volatile fund and you should expect a roller coaster ride with that one.

missile

I guess Abz property fund specialises in Aberdeen prperties? A bit surprising result when domestic house prices soared there in 2006, average price went up 26% I believe. Maybe the rental and commercial properties did not do as well?

dunstonh

Aberdeen property share invests in shares of property companies. Not the actual property. This is why it is such a high risk.

commercial properties have not increased in price in line with residential properties. They rarely do. Its not a case of not doing well or doing badly. They work differently.

missile

I understand a little better, thanks

Chrismaths

Aberdeen is the name of the company - http://www.aberdeen-asset.com/
There's also Glasgow investment management, London & Capital, although strangely nothing related to Birmingham AFAIK.

thewizz2009

Aberdeen was also one of the best performers last year, and they has been abit of a new year hangover for most things, at least in my experience

missile

In my experience too, did you drink copious ammounts of Glenfiddich too?

mroller

Chrismaths wrote:

Yes there has: http://uk.finance.yahoo.com/q/bc?s=LAND.L&t=5d&l=on&z=m&q=l&c=
http://uk.finance.yahoo.com/q/bc?s=BLND.L&t=5d

the questions still remains, why did British Land drop this much? a tumble which started exactly at the beginning of this year!!

Chrismaths

Ours is not to reason why...

BL and Land Securites have risen hugely over the last few years, and were standing at premiums to NAV in anticipation of REITs. That premium is now unwinding with the boring reality of REITs. There was a broker note out recently dissing (not investment term, I'm just getting down with the kids) REITs, and that has acted as a catalyst. UK commercial property is probably not the place to be at the moment - I heard recently of a shopping centre down south selling on an initial yield of 3.2%! With interest rates at 5.25%, and the economy looking like it's going to tip over, that's deeply unattractive.