UK property funds ‘a long way’ from reopening

Mr Johnson added: “It may not be the case of ‘first-move advantage’. If investors are short of cash there could be a rush to the exit door if a fund opens ahead of others.

“For that reason, it's important that the valuation profession looks to lift the uncertainty clause more widely as soon as conditions allow — in concert and in unison.”

Looking forward

Mr Johnson said he was “actually very optimistic” when looking at the market long-term, saying “there is a good market out there and where else are people going to get the returns you can from property?”.

But David Penny, managing director and adviser at Invest Southwest, disagreed. He said: “The prospect for commercial property in the near and even medium term is poor and our portfolios are very light on it now, if there is any at all. 

“If and when property next looks a good bet, potential illiquidity is a feature which must be borne in mind rather than a reason to steer clear. For now, for most, avoid property funds.”

Alan Chan, director at IFS Wealth and Pensions, said the issue highlighted the mismatch in between the liquidity of the underlying property assets and the legal structure of open-ended property funds.

In December, the FCA it issued a joint report with the Bank of England which floated proposals to curb the "mismatch" between redemption terms and funds' liquidity.

The City watchdog was expected to provide an update on the development of new rules for open-ended funds later this year, but this has now been put on hold due to the coronavirus crisis.

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