10:53am Friday 29th January 2010
UK property investment experienced record growth last quarter in the clearest sign yet that the downturn is over, research published today by national commercial property consultant, Lambert Smith Hampton (LSH), has revealed.
LSH’s quarterly survey of UK property investment identified that the market’s key indicator - transaction yields – improved in the quarter September to December 2009. The 61 basis point movement, to reflect an all property transaction yield of 6.99 per cent, was the largest shift since their survey began in January 2000.
LSH chief executive, Ezra Nahome, said: “Property returns are almost four percent above the return on ten-year gilts. As a result there is an overriding perception that property is good value.
“The improved sentiment, coupled with an increasing flow of funds, saw institutional buyers strongly return to the property market in the last quarter of 2009, purchasing £2.8bn worth of property and selling £2.5bn, leading to net investment of £320 million.”
Following a slow first half to the year, total investment activity of £24.6bn was recorded for 2009, only marginally down on the previous year’s figure. While this is the lowest annual value of investment market activity since 2001, the market staged a significant recovery in the second half of the year with transactions to the value of £14.7bn.
Nigel Palmer, Head of LSH’s St Albans office said: “The Hertfordshire investment market witnessed a number of major transactions across all sector in 2009.
”Noteable deals included the £42 million sale of three office buildings at Leavesden Park, Hertfordshire County Council’s purchase of two office buildings in Stevenage and the £60 million purchase of the Sainsbury’s warehouse at Waltham Point. Retail market activity included the sale of Waterfields Retail Park in Watford and The Howard Centre in Welwyn.
“At a local level we continue to perceive a two tier market, private buyers and secondary investors remain cautious about occupier demand and covenant status together with difficult funding issues.”
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