Property is an asset class with a lot of questions around it, from big picture stuff around remote working’s impact, to the perennial challenges of changes to the interest rate cycle.

A glance at our database indicates the allocators we cover have scrunched up the exam paper and headed for the exit, rather than try to ponder the above.

The average exposure to property funds has fallen from 5 per cent at the end of June 2023 to the present level of 3.5 per cent, a move almost certainly the function of investor wariness around the outlook for the asset class as rates have risen. 

This was echoed in the recent update to our sentiment tracker, where 42 per cent of respondents said they were negative towards property and only 5 per cent positive (the rest were neutral).

One DFM we spoke to said: “Property still offers a reasonable yield pick-up compared to other asset classes, as well as some income protection against inflation. However, there is also uncertainty surrounding several property types in a post-Covid world: the anticipated demise of the office and high street retail sectors could be overstated but current pressures on tenants will have long-term repercussions.

“We tend to favour more specialist parts of the property market enjoying structural growth, such as healthcare, logistics and digital infrastructure.”



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