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Will UK property funds ever be the same again?

The recent announcement that Norwich Union has suspended redemptions of its UK property funds was a further nail in the coffin of the UK property investment sector where times are very tough. There are serious concerns that the impact of effectively blocking unit holders from the realising their property investments will have a detrimental impact in the short to medium term and possibly longer term. Many people will never have experienced such strict conditions and sudden changes to procedures overnight.

Let's not forget that many UK consumers are suffering during the ongoing economic downturn and a number had been depending upon the redemption of their property funds investments to reduce their own financial pressure. There is also great concern that by the time the redemption suspension is lifted we could see UK property prices sharply lower and even fewer buyers willing to acquire both corporate and domestic properties.

Liquidity of property investment funds has always been an issue but one which has tended to remain in the background with very few implications. The sudden emergence of a number of redemption suspensions has shocked many investors who feel aggrieved that they are locked into falling assets and unable to use their investment funds to reduce their own pressures.

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