2008 sees property investment almost halved
DIRECT investment in commercial property will fall by 55% by the end of this year, according to Jones Lang LaSalle.
Mathew Atkinson, of Jones Lang LaSalle’s Leeds office, said: “We are back at 2000 trading levels. Some prices have fallen up to 50% since the peak in 2007.
“The first few months of 2009 may see further price reductions as rents fall, however, later next year conditions could change. We are seeing signs of increased lending and the gap between property yields and interest rates is already proving attractive to some.”
The property services group expects the figure in the UK to stand at £21bn by the end of this year, down around 55% on 2007.
Mr Atkinson said Yorkshire had not been immune to the reduction in commercial property transaction volumes which had been seen across the UK, caused by the ongoing financial crisis and poor market sentiment.
He said large lot size transactions of more than £5m remained limited due to the lack of availability of debt and low investor confidence.
Approximately £100m of office investment transactions in Leeds city centre have been completed, with a further £36m currently under offer, compared to a peak of £260m in 2006.
Mr Atkinson said: “While it is difficult to put a number on 2009 volumes, we expect them to be broadly similar to 2008 but back-weighted. The market should start functioning more normally towards the middle of next year as pricing adjusts to levels that tempts buyers back and particularly if debt becomes more available again.”
Going forward Jones Lang LaSalle said it that a correction in UK prices combined with a weaker pound would make the market more attractive in relative terms to non-UK and global investors.
A spokesman said: “Investors will attempt to buy when they perceive the bottom of the market has been reached. Our evidence suggests some buyers are already targeting certain sectors looking for bargains.”
