Property Market Upswing Boosts Recovery Hopes
Research published by national commercial property consultant, Lambert Smith Hampton (LSH), signals that the property market may be recovering from one of the sharpest downturns ever experienced.
The results from LSH’s quarterly survey of the UK property investment market identified that in a positive sign for commercial property, the market’s key indicator – transaction yields – fell last quarter for the first time since the start of the credit crunch in August 2007.
Bill Binnie Head of Investment with LSH in Scotland said: ”The latest results are great news for commercial property. Following on from the easing in the market that was seen in Q2, this latest movement has provided a much needed boost”.
The research identified that the average yield on transactions fell by 19bp to 7.68 percent (see graph).
Institutional investors played a more significant role this quarter, returning to the market to purchase their highest level of property in two years. While UK institutions increased their buying activity this quarter, it is still overseas investors that are dominating the buying market.
The availability of good quality investment stock was an issue that restricted activity levels over Q3 as vendors were reluctant to put property onto a thin trading market. This may well change over the coming months as rising values encourage the release of some better quality property.
Bill Binnie said: “There have been some very interesting changes over the past three months. An ever increasing weight of money particularly from institutional investors, is chasing limited stock. In Glasgow alone, three major investment opportunities at Capella Broomielaw, Collegelands and MOD Kentigern House have gone under offer to traditional funds at figures significantly better than asking. This may reflect a relatively strong level of occupational demand in the city which has seen major lettings to Tesco Bank and Shell over recent months and with a number of major requirements still seeking space.”
Written By: elizabeth
Date Posted: 11/16/2009
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