BCO: REITs not giving investors best returns

The British Council for Offices (BC) says REITs are not giving commercial property investors the best returns for their money.

According to the London Stock Exchange, a REIT is a company that owns and manages property on behalf of shareholders which provides a way for investors to access property assets without having to buy property directly.

But Mat Oakley, chairman of the BCO research centre, suspects that the average fall in REITs share prices this year is already far greater than the fall in capital values on commercial property.

"It's certainly far, far in excess of movements in income," he says.

"Had you spent £100,000 on commercial property in January 2007 and had you spent £100,000 on a listed property company you would be feeling a lot happier with your direct property investment rather than your REIT."

The IPD UK Monthly Property Index for June 2008 shows that commercial property returns fell by -1.5 per cent.

However, research commissioned by Investec Private Bank's Structured Property Finance division, reveals that the majority of property professionals believe commercial property valuations will stabilise before the end of 2008.

Martin Slowe Property Services are Commercial Property Consultants offering a full range of Commercial Property Services.