January 1, 2013
Regional slump responsible for overall UK property fall
The New Year starts with news from Chicago based property broker Jones Lang LaSalle that investors spent some £ 30 billion on income generating property in the U.K. during 2012, about 9 percent less than in 2011. However there was a marked disparity between the London market and the rest of the UK. London deals totaled £18 billion in 2012, the highest figure for four years, while purchases outside the capital reached 12 billion pounds, the lowest amount over the same period.
The pattern is set to continue over the coming year as a lack of prime properties and limited lending by UK banks means investors with cash will focus on developing properties in central London.
‘Given the limited finance for this type of activity, pricing will be competitive for those with equity and therefore we expect to see more overseas capital looking for opportunities to partner with local specialists and fund prime developments,’ the report said.
According to the report, other investors will look to improve the quality of existing buildings in London or change their use to increase rental income and boost the selling price. JLL identify how firms like Blackstone Group LP, manager of the world’s biggest property fund, have already begun to cash in that sort of investment.
The report concludes that some UK funds will begin to consider buying more real estate outside London next year although it concedes that ‘in regional markets, capital values have not yet started to recover and an anticipated recovery has yet to be priced in.’