eFinancialCareers

With commercial property in Scotland predicted to see zero growth this year, the future for property-linked funds – and related recruitment – is looking decidedly shaky.

An analysis of the market by consultancy Drivers Jonas has found that whereas 12 months ago there were 10 buyers for every one property on the market, now 10 sellers exist for every purchaser.

This has in turn made the climate very tough for real estate funds, argues Andrew Kubski, partner in the investment team at Drivers Jonas.

“The macro economic picture cannot fail to have an effect,” he says, though stressing that the general crunch on funds at the moment is likely to have a far greater impact on recruitment than any property-specific issue.

With London prices already slumping, panic selling has even forced some operators, such as Scottish Widows, Scottish Equitable and Friends Provident, to introduce delay periods for investors wanting to withdraw money from their commercial property funds.

The tougher conditions are not just a Scottish but a European-wide problem, agrees Alessandro Bronda, head of investment strategy at Aberdeen Property Investors, which has predicted a decline in European property returns this year compared with 2007.

“In certain sectors pricing is turning lower, especially in the UK, and this is spreading to the rest of Europe,” he says.

Earlier this month, delegates to the Mipim real estate conference in Cannes were warned that Continental European property markets would be the next to catch a chill, following the growing woes of the US and UK markets.

Iain Reid, chief executive of real estate fund Protego, predicted capital values could fall by around 10% this year on top of the sharp falls already seen in the last three months of 2007.

“There will have to be some further slippage of prices in continental Europe,” he reportedly told a real estate conference in Cannes last month.

Nevertheless, many property funds do still have significant amounts of capital unallocated, stresses Bronda and, for now, appear to be holding their nerve when it comes to jobs.

“I have not heard of any funds that have decided to sack people, but maybe they are slowing down on expansion or recruiting people,” he points out.