A comparison has been drawn between the recent halt to redemptions from open-ended property funds in Europe and the situation in Germany in late 2005/early 2006. At that time, temporary fund closures and subsequent restructuring were necessary due to portfolio valuation reviews and a general loss of investor confidence. Today, however, redemption restrictions do not stem from “self-made” issues within the commercial property industry but from the turmoil within the financial markets as a whole.

The current heightened redemption levels have not been caused by a mass withdrawal of cash by a large number of retail investors. Rather, the trouble has stemmed from a few large-scale institutional investors withdrawing big chunks of capital motivated by the liquidity problems they face internally. Their strategy of reducing exposure to commercial property is debatable since real estate investments have outperformed equity investments in most instances.