Nick Wilson

Property Editor

THE weakening UK and South African property markets stand to offer relatively cheap opportunities for Investec Property Investments, which has large UK and South African property expansion plans.

Investec Property Investments head Angelique de Rauville recently stated that the group would be replicating its South African business offering in the UK to take advantage of falling prices there.

The new UK business, called Investec Property Investments UK, was launched in October and will invest in both UK listed property funds or real estate investment trusts (Reits) and fixed property.

“We are ready and it’s all systems go, but we haven’t bought any investments yet in listed property. They (UK Reits) are still trading at 4,4% current yields, which is too low given the relative risk associated with the UK commercial property market,” said De Rauville.

Although UK listed property prices have plummeted and were now trading at a 35% discount to net asset value, this still had to be adjusted downwards. Once net asset values were lowered, De Rauville said Investec Property Investments UK aimed to secure property assets worth £200m under management in the next 12-18 months.

She said 50% would be invested in UK Reits and 50% in fixed property. The fixed properties would be managed in an unlisted property fund.

“A year ago, we wouldn’t have invested into the UK, but a substantial softening has taken place over the past 10 months and is expected to continue for the rest of the year and most of next year. This will provide even greater opportunity,” she said.

De Rauville said Investec Property Investments had also set up a global fund called Investec Global Special Opportunities Fund, which would invest in property in Romania, Chile, Brazil and Europe and possibly the US and UK later.

She said 375m Euro would be invested in this fund over the next two to three years.

De Rauville said Investec Property Investments (SA) was putting together an unlisted property fund. Properties valued at R1,8bn had been acquired. There was also a R500m development pipeline.

“This is to cater for our institutional clients who are looking for direct exposure, in addition to listed property exposure,” she said.

Source: Business Day