Property investment expert comments

I recently came accross this comment by Chris Turners the property manager in the Interim Statement for TR Property Investment Trust featured on www.iii.co.uk discussion board which I rather like and illustrates very vividly what situation we are in currently with respect to income generating property stocks.

"As investors, we feel akin to the residents of a City threatened by a hurricane. We know that there is a storm out there offshore, and the media is getting increasingly excited about all the dreadful damage that could occur. They may be right but dire predictions are good copy, and storms sometimes moderate or veer off in another direction. We batten down the hatches and, if we can, leave town, only to sneak back after the storm has passed to see that well protected property is still there and damage is generally less than predicted.

The two really dreadful property share markets in my lifetime have been 1973-75and 1989-92. Both came against the background of sky high interest rates, large scale overdevelopment and a sharp rise in unemployment which drove down rental values. We do not have overdevelopment today, no-one is forecasts sky high interest rates or a doubling of unemployment. So the fall in property values is a pricing issue.

For the moment uncertainty prevails and markets don't like it. All news is taken as bad news. What we can say is that, short of Armageddon, we have seen the worst of the share price falls in the well run well financed property companies.

I think that the point of maximum pessimism is still to be reached. An event may mark that point, but what event I cannot tell. That event could conceivably occur anytime now or it may still be twelve months away.

So we wait with our hatches battened down - staying in town as an investor dedicated to property - trying not to be too brave or too pessimistic. We will search for opportunities in others' distress and look forward to the day when we can report a return to decent growth."