According to the British Property Federation, many of the country's pension funds would be in a far healthier position if real estate investment was more highly represented in their portfolios. The group has called on the government to reduce taxes on property transactions in order to encourage more funds to invest in the area.
Speaking this week at the Labour Party conference, the Federation's president, David Hunter suggested that property investment firms should be excluded from paying corporate taxes, and that stamp duty on real estate transactions should be reduced. This would bring the UK into line with other major economies such as Japan, the US, Australia and France, according to Mr Hunter.
"If pension and long term insurance funds had continued to hold 20 percent of their portfolio directly in commercial property, as they did in the late '70s and '80s, then these funds, our pensions, would be wealthier today by around 44 billion pounds," he claimed, adding that pension firms can no longer ignore the property sector as an effective diversifier of risk.
According to Reuters, commercial property in the UK has been the best performing asset class over the last decade, surpassing returns from both equities and fixed income investments.
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