Overseas investors show confidence in UK property market, according to a new survey

Written by Ray Clancy

Tuesday, 09 November 2010 11:33

Overseas investors are more confident about the UK property market and London office space is on the top of their target list, a survey has found.

After the success of its first Global Investor Sentiment Survey earlier this year, Colliers International has looked at how investors feel about the current state of the market in their region, and cross border, and what they think the future might hold for the property sector.

It found that some 62% of those surveyed in Western Europe said they were looking to make cross border investments in the coming months, and that office space in London is on investors’ top target list.

The results of the third quarter 2010 Global Investor Sentiment Survey show that investors have considerably more confidence globally than they did six months ago, although many feel that real estate markets are ‘unusually uncertain’ and will remain that way for the foreseeable.

It also found that 73% of investors are looking to expand their real estate portfolios in the coming 12 months and 77% of investors believe that prime effective rents in the office sector will have bottomed out by the middle of next year, with 42% suggesting that rents will have found their floor by the end of 2010.

Those surveyed were also asked to rate the current state of the property market via the Global Property Clock. Most investors, 21%, felt that their domestic market has passed the bottom portion of the clock-face, saying that markets are on the up-swing (8 o’clock) so demand is rising, availability and vacancy is falling, and headline rents are on the increase.

This compares with the second quarter when most investors placed the market between 5 o’clock and 6 o’clock, so it represents a significant increase.

In the next 12 months, most investors don’t see the market being much changed from 8 o’clock 46%, so again they feel that the market will still be in the early stages of an upswing.

‘Conducting these surveys provides us with invaluable information to help us gauge the general feeling of those working on the frontline of the property market. For example, in the UK and across Western Europe, investors are demonstrating a lack of risk appetite which can be linked to both the wider economic uncertainty, as well as fears surfacing over the impact of cuts in government expenditure,’ said Chris McLernon, chief executive officer EMEA, Colliers International.

‘However, 72% of investors believe it’s unlikely that there will be a double-dip recession in their region/country. So this illustrates a level of confidence and optimism about the market for the upcoming 12 months that we certainly did not see in our last survey,’ he added.