UK - Deutsche Asset Management is to wheel out a new property fund for institutional investors in June, despite predicting a downturn in the UK real estate market for this year.
Deutsche UK Property Ventures Fund (No. 2) is proposing to launch on June 30, with a target size of £100m. Minimum investment is £200,000.
The investment period is three years from the initial closing. It has a life of seven years from the first closing, with a possible extension for two consecutive one year periods.
The target is to outperform the IPD UK Monthly Index by over 2% per annum, with the intention of delivering a 15-20% rate of return on an annualised basis.
The launch follows in the footsteps of the Deutsche’s UK Property Ventures Fund (No. 1) introduced in July 1997.
According to Deutsche, the UK property market reached a peak in early 2000 and has weakened since. Consequently, 2002 is projected as the “poorest” year in terms of total returns this cycle, with greater momentum anticipated for 2003.
“Institutions have become cautious and have focused on the defensive qualities of property investment,” said Deutsche. “This has created an opportunity to invest in future development prospects.
“We anticipate that once economic growth is re-established and companies begin to expand, demand for high quality office, retail and industry property will re-emerge.”
By Madhu Kalia