Commercial Finance Specialists

Ignis is warning of a possible short-term disconnect between capital value growth and rental value growth.

Asset management firm Ignis has issued a briefing note to investors in its £510 million UK property fund, warning of a potential short-term disconnect between capital value growth and rental value growth.

Insufficient supply of quality commercial real estate has been blamed for the situation, Investment Week reports, although the firm remains confident about the medium-term prospects for commercial property investment.

The Investment Management Association said recently that net sales into property funds stood at £1.4 billion in the fourth quarter of 2009, although Ignis expects its announcement to lead to reduced inflows in the short term.

"While a short-term correction poses little threat to those with a medium to long-term time horizon, Ignis believes it prudent to highlight potential pricing pressures in the current market," the development funding firm said in the note.

Ignis recently announced a strategic partnership with Castle Hill Asset Management, a majority employee-owned company operating in the UK and US.