Several property trusts halted the withdrawals of money yesterday as more and more clients submit requests for cash in their assets in the UK real estate funds. Two days back, Standard Life announced that it was stopping clients from withdrawing money from £2.9 billion from the UK property fund. Yesterday, both M&A and Aviva halted withdrawal yesterday. These three funds jointly hold £9 billion of clients’ money. Investors have been concerned on the direction of the UK property market after the referendum voting.
The top end of the market has been declining since mid-2014 and prices were down 8 percent since and now the referendum vote is likely to spread that trend to lower segment and accelerate. Yesterday’s Bank of England (BoE) published Financial Stability Report that has expressed concern with regard to this Real Estate Investment Trusts (REITs). Post-referendum the share price of the segment has declined about 25 percent and while the broader market has crossed above the pre-referendum high, property stocks have been lagging.
The biggest concern for these funds is liquidity. Most of them are likely to crumble under the pressure of disorderly withdrawal. As of today, share prices of real estate agents, house builders, and commercial property investors are declining steadily.
- Savills, the estate agency, is losing 3.64 percent
- Foxtons is down 3.25 percent
- Barratt Developments is off 2.9 percent
- Bovis Homes is falling 2.7 percent
- Great Portland Estates is dropping 2.8 percent
- Taylor Wimpey is down 1.9 percent
- Persimmon is off 1.6 percent
- British Land is dropping 1.9 percent
- Land Securities is down 1.5 percent
