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Bottom Line: Soros takes profits

Monday 11 July 1994 23:02 BST
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THE property industry's bears received heavyweight support yesterday from George Soros who took profits on stakes in British Land and Berkeley, increasing the jitters in a nervous sector.

Their argument, which Mr Soros appears to share, is that a 6 per cent discount to underlying assets, compared with a 23 per cent long-term average, is not enough with slowing capital growth.

It is not self-evident, however, that Mr Soros's move from equities to direct property makes complete sense.

Property values may continue rising after the sector's shares have peaked if an improving economy drags up rents. But recent evidence suggests that is not happening - rents may actually have fallen in the past two months.

A combination of lower income and rising yields would wreak havoc with capital values and the shares that they underpin.

Mr Soros, wise to have quit property shares, may regret putting his cash into the buildings themselves.

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