General News and Deals
Positive Rental Growth Predicted A new report from Lambert Smith Hampton confirms that investment activity levels are down on last year – and average yields on transactions have risen. The slowdown in the property investment markets started in the second quarter and has been exacerbated by the recent events in the banking world. LSH’s ‘UK Investment Transactions’ (UKIT) Activity Survey is published quarterly in association with Property Data and is unique in looking at actual deals transacted. It therefore provides an accurate snapshot of the direction of the market. The latest report, UKIT Q3, analyses £28.1bn of transactions that have been reported in the six-month period between April and September 2007 inclusive. The report reveals that institutions, which accounted for more than one quarter of all purchases during 2006, have almost halved their buying activity so far this year, with little sign that the position will change in the final quarter of the year. According to LSH, this change in the market has encouraged entrepreneurial property companies back into the market, particularly where they are well funded and have existing debt facilities.		Ed Jones, head of investment at LSH in Birmingham, said: “The market has seen the institutions press the pause button since the summer. The prospects for rental growth still look to be good and the prices that investors need to pay have slipped. This is great news for investors who are well-funded and still able to access finance at competitive rates.” The decision by the Federal Reserve to cut interest rates in thee US has a positive impact on global interest rates with £ and € SWAP rates falling from their mid-year highs. This has created a position whereby a number of opportunities have now come back onto the radar. There is the added bonus that prices have fallen. Overseas investors have also responded positively, committing a net £6bn to the market over the first nine months of the year, whilst UK debt-backed investors have kept buying at an even pace. “We expect activity levels to remain slow in the final quarter of 2007 as some investors continue to take stock of the effects of the ‘credit crunch’. This will mean that annual transaction volumes will have reduced for the first time in seven years,” said Ed Jones.