In the 2008 crisis, we saw redemptions from property funds reach more than one half of assets under management. Many of you saw the consequences – firesales of assets, magnifying the market downturn. Open-ended property funds now have 80% more assets under management than they did on the eve of the crisis. So the growing importance of funds offering short notice redemption and investing not just in property but in other potentially illiquid markets too, is a focus of regulators in the UK and internationally. The Bank of England, along with the FCA, is looking closely at the ways these funds might contribute to broader instability. And it’s in part thanks to working closely with you that we’re alert to this. By working together, our nurturing of resilience can keep up with nature’s inevitable fight back. We can together create an environment that gives you the best chance of success. Whether you succeed will be down to you. But one thing is for sure. Your success is important to everyone. For its part, the Bank of England is committed to ensuring the financial system serves you – the real economy. That’s why, here at Guildhall, in 23 days’ time, we’re hosting an Open Forum to bring together policymakers, financial market users, academics, and wider society. The aim is to chart the way for financial markets so that they serve their users and contribute to prosperity. 4  BIS central bankers’ speeches  You can sign up on our website. Please do.
Alex Brazier: Nurturing resilience to the financial cycle Speech by Mr Alex Brazier, Executive Director for Financial Stability Strategy and Risk of the Bank of England, at the Property Investor’s Banquet, London, 19 October 2015. *  *  *  I am grateful to Martin Arrowsmith, Oliver Burrows, Neil Crosby, Kishore Kamath, Magda Rutkowska and Robert Sturrock for their assistance in preparing these remarks. My Lord Mayor, Lady Mayoress, Ladies and Gentlemen. It is a great honour to join you this evening. It’s clear why you are celebrating. A crane-filled skyline to the City. New office space completion in Central London: a ten-year high; More than thirty schemes underway: a twenty-year high; And transactions that are near a record high. Half of them financed by capital attracted from overseas. Commercial property is punching well above its weight in attracting capital to Britain. Those capital inflows are helping to sustain steady growth while our major trading partners lag behind. So your industry is contributing to the livelihoods of people up and down the country. But while that’s true in the good times, it’s true in the bad times too: when commercial real estate catches a cold, the whole economy starts to shiver. It’s not just that the construction industry suffers and jobs are lost, or that banks are injured, impairing their lending to the rest of the economy. It’s that small businesses see their own property fall in value – assets that are vital to secure their borrowing.