"The cult of the equity looks like it has gone for the moment", James Thornton, director of Savills Fund Management, told charity investors on Wednesday 28 November.
Speaking at a seminar in London, Mr Thornton pointed out that returns from equities had plummeted over the past two years. "Property is a re-emerging asset class", he said, and suggested that charity investors should consider diversifying their portfolios with investments in the commercial property market.
"In the last five years, property returns have been strongly positive. At a time of low inflation, there have been attractive real returns", he said. Savills are predicting a nominal total return for property of between 8 and 9 per cent over the next three years.
However, Mr Thornton said that while Savills did not think that the UK economy would go into recession, a slowdown next year would lead to a slowdown in property returns, followed by a recovery in 2003.
Speaking at the same seminar, Ian Flanagan, trustee of Christ's Hospital Foundation and chairman of the advisory committee of The Charities Property Fund, said: "Property will figure much more prominently in the asset allocation debate of the future. The most important question for any trustee board is the need for diversification and property provides diversification benefits".
"However, direct investments in property were beyond the financial capacity of most charities", said Flanagan. Indirect property vehicles, such as property unit trusts or The Charities Property Fund, enabled smaller charities to invest in property as they would equities and gilts.