Investors are increasingly turning to the commercial real estate market as they search for assets that will perform well in the current economic climate. According to data published by Lambert Smith Hampton (LSH) the volume of transactions in the UK's commercial property sector rose by 22 per cent during the third quarter of the year, compared to the previous three months, to total GBP 8.06 billion.
The central London market took the greatest share of the investment, with GBP 3.6 billion being channelled into the city's real estate. Offices in the centre of the capital were a particular target, accounting for 63 per cent of the transactions in the city during this period. Ezra Nahome, chief executive officer of LSH, commented: "Commercial property continues to provide attractive returns to investors in comparison to other asset classes." He added that investment activity in the sector may increase further over the coming year due to the second round of quantitative easing implemented by the Bank of England earlier this month.
Meanwhile, W A Ellis asserted that a growing number of international investors are ploughing their money into London's property markets. According to the estate agency, buyers from the Middle East and Greece are among the most active at present, while other European investors are also showing an interest. The firm also noted that housing rents in the capital have reached an all-time high, with the average rent in London now GBP 2,075 per month.
Rising investment in commercial property is expected to continue into 2012, Mr Nahome predicted. He stated: "The underlying concerns over the stability of the UK economy could lead to a slowdown in traditional sales activity in the fourth quarter, but we do expect an increase in portfolio and debt sales as banks further downsize their loan books." However, he added that the significant jump in investment volumes during the last three months was due, in part, to several large deals all concluding.
- Tuesday 25 October 2011