Investing in Commercial Property: What You Need to Know

Commercial property fans cite the asset’s high and stable income as a reason to invest but there is an issue with liquidity

Emma Wall 12 December, 2016 | 12:59AM

This article is part of Morningstar's Guide to Alternative Investing; providing everything you need to know about property, commodities, infrastructure and other diversifying assets. 

In 2014 and 2015, the commercial property index delivered double-digit returns – particularly impressive if you consider that the FTSE 100 was flat or falling over this period. As a result commercial property funds attracted significant inflows, offering yield where all other asset classes’ income was dwindling, and total returns for those wo preferred to accumulate pay-outs.

But in May this year, Morningstar Investment Management’s Simon Molica was starting to get nervous, saying: “There has been a strong recovery, but you've got to question what the risks will be and we think of liquidity as being very important. We are actually quite cautious of commercial property and are looking to exit as soon as possible in all but our income portfolios.”

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About Author

Emma Wall  is former Senior International Editor for Morningstar

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