Owen Lennie, managing director of Light of Day investor group, said that even on a "highly restricted basis”, "half a dozen" of more than 200 property funds in Australia are expected to reopen for redemptions in the next 18 months.
However, investors have to wait several years before they can touch their capitals because most of the fund managers are still fearful about run on redemptions.
"A handful of funds could be reopened to redemptions in the next 18 months if they can sell a property or two, but it will remain a very difficult situation," said Mr. Lennie.
He added that the banks’ unwillingness to lend since the financial crisis resulted in fewer prospective property buyers.
When the government said back in October 2008 that it would guarantee bank deposits of up to $1 million, the unlisted funds sector that holds $25 billion from about 240,000 investors went into a tailspin. Unlisted mortgage investors and property funds crawled out for exits, prompting fund managers to suspend the withdrawals indefinitely. None of the property or mortgage funds have yet emerged from the freeze.
The Australian government announced that on March 31, it would end the wholesale bank guarantee it offered to aid fund lenders during the financial crisis. However, its guarantee on bank deposits will remain in tack and will be reviewed in October 2011.
The unlisted funds industry is mainly comprised of property and mortgage funds.
Tim Murphy, an analyst from Morningstar said that the unlisted funds sector had changed essentially due to the freeze, and many of the investors affected would be unlikely to return to the industry.