The Share Centre: It's time to get back into commercial property

Following news of the first monthly capital growth in commercial property funds for over two years, Sheridan Admans, investment adviser at The Share Centre explains why now could be the right time to buy into commercial property funds and highlights two for consideration.

"Many investors have come back to the UK commercial property market recently, citing the potential to make market gains and the short-term high yield that can be obtained from commercial property.

"While liquidity is still an issue within this sector and trading in some funds is still suspended, many property funds are now amending their terms, such as exit fees and notice periods to appear more favourable towards investors. At the same time, the market is starting to stabilise.

"Commercial property funds are an attractive addition to a portfolio to diversify away from equity and debt income. If property funds don't feature in your portfolio, now might be the time to ensure they do."

Scottish Widows Investment Partnership (SWIP) Property Trust

SWIP Property Trust gives greater exposure to valuations and rental incomes because it invests in physical assets as opposed to shares of companies involved in property development. Therefore, it offers real asset diversification as part of a well rounded portfolio of funds.

Like many Unit Trusts and OEIC managers, SWIP has been able to hold up to 30% in cash. As a cash rich fund, SWIP Property has increased bargaining power as a cash buyer. This comes at a time when companies or institutions that are unable to borrow on favourable terms have been forced to raise cash through rights issues, negotiate covenants or sell assets at a hefty price.

Schroder Global Property Securities

This fund gains global coverage through investing in real estate investment trusts, equities and debt issues. It, therefore, may be more suitable for investors looking for less direct exposure to the property sector.

Schroder Global Property Securities is particularly suited to investors who are willing to accept the risks associated with this type of investment, including currency fluctuations and varying taxation laws.

Schroder Global Property Securities is a strong performer in its sector and also offers diversification.