Commercial property is battered by Brexit fears but brave buyers could make a quick 5%

Commercial property investors received a nasty shock this month when it emerged that their holdings were worth around 5% less than they assumed.

The assets they held, through a number of large commercial property funds, had not actually fallen in value by that much, rather the fund management groups in charge had changed the way units were priced.

The potential hit to investors amounted to between 5% and 6.25%, justified on the grounds that the numbers selling had increased, creating in turn the possibility that the costs of running the fund would fall disproportionately on investors that remained in.

The reasoning behind this controversial move is obscure and misunderstood by many investors, who simply feel the goalposts have been moved to discourage them from selling up.

Some investors may even fear a repeat of 2007, when the commercial property fund sector saw huge outflows and investors were trapped. The funds not merely changed pricing methods but imposed outright bans on withdrawals.

However, experts feel the situation is not nearly as dismal this time, and there may even be a silver lining for income investors looking to buy in.

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