St James's Place withdraws from the real estate sector

After more than two decades in the real estate market, St James's Place, one of the UK's leading wealth managers, is withdrawing from this sector. It will close its property funds valued at £1.8 billion. In light of a "challenging period" and the view of some investment experts that open-ended property funds have become obsolete, SJP is preparing to wind up its three relevant funds. The demand for office space has significantly decreased as a result of the Covid-19 pandemic, making investors increasingly hesitant. This has prompted SJP to gradually liquidate existing real estate investments in the funds, a process that could take up to two years. To manage the liquidation process and enable investors to receive regular repayments, the company has brought Invesco Real Estate on board. Tom Beal, the Investment Director of St James's Place, emphasized that the market development and investment processes have undergone significant changes since the introduction of the property funds in 2004. Closing the funds after the suspension in October 2023 was the most logical option to maximize value for clients. Previously, SJP had frozen unit funds and deferred payments in its life and pension funds to avoid selling properties below market value. Moreover, the annual fee was reduced by 0.15 percentage points, a discount that will be maintained during the liquidation. Despite the increasing number of closed products, some professionals continue to emphasize the potential of the real estate sector. Due to falling interest rates and controlled inflation, now might be the optimal time to enter this market. The commercial real estate sector still offers an attractive source of income and diversification aside from stocks and bonds.