Aberdeen sees 9.2% return from UKCIG commercial property

Aberdeen Property Investors said it expects its UK commercial property to post 9.2 percent annualised returns over the next five years, as the recovering sector becomes more attractive than lower-risk asset classes.

The property investment unit of Aberdeen Asset Management said on Monday it bought about 250 million pounds ($408 million) of UK commercial properties in the last three months for institutional clients, and plans to invest an additional 500 million pounds in the next few months.

"Investor interest in UKCIG property has risen over recent months as property has looked increasingly attractive, relative to other asset classes, from a yield perspective," Aberdeen Property, which manages about 21.7 billion pounds globally, said in a statement.

British commercial property values rose 3 percent in December, the largest monthy rise since records started 23 years ago, as the market recovers after a two-year downturn, although rents continued to fall slightly, data showed on Friday.

The company is forecasting an annualised return of 9.2 percent for the sector from a five year viewpoint, of which about 7 percent will be from income and the remainder from strong capital returns over the next year.

"Competitive bidding for limited stocks in the UK will likely continue to drive capital values up in the short term, bringing in total returns of 16 percent in 2010, despite rents still falling in all sectors," Aberdeen Property said.

In a separate statement, funds manager Henderson said it will re-open the New Star International Property Fund on Feb 12, after successfully disposing of assets and as investors regain confidence.

The fund was suspended in Nov 2008 following a surge in investor redemptions at the height of the global financial crisis,.

The UK Financial Services Authority has since approved stricter redemption procedures for larger investors with holdings over 7.5 million pounds, including requiring a month's notice if they wish to sell shares, giving fund managers more control over liquidity, Henderson said.

UKCIG Property News, January 2010