The results from the 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.
The research identified that the average yield on transactions fell by 19bp to 7.68 percent.
Ezra Nahome, CEO and Head of Capital Markets at LSH 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.
“Institutional investors have 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 buying activity.
Ezra said: “Overseas investors accounted for more than 50 percent of purchases in Q3 and they are responsible for 43 percent of purchases in the year to date but things might be changing. The return of UK equity based investors will help to provide more balance to the market. Each of the major investor types has been active in different sectors. Overseas investors are still majoring on the Central London office market, while UK institutions have targeted the retail and industrial sectors.”
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 few months as rising values encourage the release of some better quality property.
Andrew McGahey, Head of Lambert Smith Hampton’s Cambridge office said:
“This is not to say that the market is now on a one way route to recovery as the occupational market has remained weak.
“The warning sign for the market at the moment has to be the strength of occupational demand. Rental values are falling across most markets and the economic conditions, while improving, are likely to remain tough.”
Lambert Smith Hampton (LSH)
LSH is a leading commercial property consultancy with an unrivalled national network focused on the UK and Ireland property markets. Its expert teams deliver a full spectrum of transactional and consultancy services and business-driven solutions for clients. LSH is the ‘UK’s most active national agent’ and ‘Top National Office and Industrial Agent’ (Estates Gazette’s ‘EGi Deals Competition’)
Lambert Smith Hampton’s (LSH) Cambridge office is a commercial property consultancy providing property services and advice in Cambridge, the surrounding area and nationally. With LSH clients have the added advantage of each office being backed by the strength of a national office network. For clients, this means 10 key divisions and over 850 professional staff working together to address the commercial property difficulties you may face, anywhere in the UK.
Lambert Smith Hampton is a founder member of the Elite Cambridge Business Circle.
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For more information contact:
Andrew McGahey
Director, Head of Cambridge Office
Lambert Smith Hampton
Tel: 01223 276336
Email: amcgahey@lsh.co.uk
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