FTAdviser.com

Advertising

In its quarterly property investment perspective released today (22 August), REITA said 60 per cent of industry experts surveyed believe short selling of shares was a major contributing factor to the performance of the UK's listed property companies.

Money Management can reveal that a total of 24 members of REITA's expert panel were polled for the report, which includes, among other organisations, representatives from REITS, fund managers and investment banks.

Dave Butler, head of external affairs at REITA, said the property sector as a whole was not very liquid, especially in the small and mid-cap names which were exposed to higher leverage of development. They have been the target of some aggressive shorting.

He added: "Shorting is a logical, albeit somewhat concerning, strategy used by investors who have taken a negative long-term view of the market. In the long run, such volatility is not a concern, but it is certainly unsettling in the short term."

REITA also raised concerns that market conditions continue to deteriorate, with 48 per cent of participants stating a recession was inevitable. However, 26 per cent believe there will only be a short-term dip in the UK's economic performance.

This is in contrast to the previous quarterly report released in May, in which 54 per cent of the experts surveyed believed that the UK was facing a short-term dip in economic performance and only 27 per cent predicted a recession.

Furthermore, REITA also reported that 76 per cent of property industry leaders believed that investment conditions were getting worse, compared to 69 per cent in May.

Nearly a third of the experts believed that the situation had deteriorated 'significantly', while 44 per cent said that there had been a 'slight' deterioration.

Figures from the Investment Property Databank (IPD) show commercial property continued to drop in value in July, with its UK Monthly Property Index revealing total returns were -1.3 per cent. This is only marginally better than June when returns were -1.5 per cent.

The IPD also reported that property was down -16.1 per cent year-on-year.

The UK's REITS have taken a beating in the markets during the past year, with British Land, Brixton, Land Securities and SEGRO all seeing their share prices plummet.

Some also have seen their share prices fluctuate rapidly during short periods.

Brixton plc, the owner of industrial and warehouse properties, saw its share price jump to 259p from 207.5p between 15 and 23 July, then fall back to 216p six days later.

geordie.clarke@ft.com