Investment Volumes in UK Property Fall

Less money was ploughed into the UK's property market in 2011 than in the previous year, with a new DTZ report revealing investment volumes were down by ten per cent...

Less money was ploughed into the UK's property market in 2011 than in the previous year, with a new DTZ report revealing investment volumes were down by ten per cent. The firm cited a lack of debt finance as one of the main causes for the fall, as well as a "mismatch" between the pricing expectations of sellers and buyers. The number of investors entering the British market from continental Europe dropped, but this was largely balanced out by an influx of Asian financiers and those from elsewhere in the world. Global head of research at the organisation Hans Vrensen commented: "Overseas investor activity was once again focused on the central London markets. As a result, the UK remains one of the most actively-traded markets in Europe, with a six per cent liquidity ratio."

This assertion that London is the most important British location for overseas buyers making a real estate investment is borne out by figures published this week by Lambert Smith Hampton (LSH). According to the firm, 61 per cent of the total amount transacted in the UK's property sector during the first quarter of this year was generated by deals in the city, which equates to GBP4.15 billion. Ezra Nahome, chief executive officer at LSH, stated: "Activity in the capital was almost double the ten-year average in Q1 2012 as the economic outlook remained subdued, leading investors to remain cautious when assessing secondary property in the regions."

However, head of UK research at DTZ Martin Davis revealed there are enticing opportunities for real estate investment in the country's regional markets, noting that non-prime assets are not as risky as many investors believe. He explained the British market is still outperforming many of its European counterparts, adding to the appeal of locations outside London. Mr Nahome agrees, although he stressed despite the attractive pricing, there will not be a big influx of money into this asset class until more debt finance is available and there is an improvement in occupier confidence.

- Friday 27 April 2012

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