Client feedback at boutique property fund manager Forza Capital suggests high-net-worth investors believe commercial property assets are fully priced.
These investors are, as a result, selling off the assets and retaining the proceeds as cash rather than reinvesting. In its commentary, Forza noted that while "major mastheads" are currently questioning whether the commercial property market has peaked, Forza observed this trend with its clients over the past nine months.
"In late 2016, we started to receive more and more feedback from our family office and HNW clients that they felt the cycle was very toppy," Forza director Adam Murchie said.
"Many of them advised that their cash holdings were at the highest proportion of their asset mix for some time; however, they indicated they were comfortable with this because it gave them firepower when the next cycle presents," Murchie said.
Murchie added that HNW investors are still motivated to acquire strategic assets, but that commercial property currently falls short of their strict criteria.
"The default position is to sit on their hands," he explained.
"In one instance, a client advised the gap between mandates approved by their clients, and the actual investments made, was as wide as they had ever seen.
"These investors do not feel a need, nor do they have a requirement, to be fully invested at all times. As such, they remain patient and use investment fundamentals as their guiding light for investment decisions."