UK institutions see opportunities to realign portfolios – The Property Archive
Investors in UK commercial property are taking positions now, in order to put themselves in the best situation for the future given the current uncertain economic climate. So says The Property Archive, which has released research showing that UK institutions during the first quarter of this year were net sellers of office properties, and net investors in retail, as they realigned their portfolios. The largest net sellers were UK unlisted property companies and owner-occupiers, who were crystallising capital gains during Q1.
The Property Archive says investment volume in commercial property in the UK during the first quarter totalled £8.09bn, up from £6.14bn in Q1 2010 – but down from the £13.24bn invested during the final quarter of 2010. The firm notes that UK institutions made the most purchases, at 34.7% of total activity, followed by overseas institutions at 27.9%. UK institutions were also the most active sellers, at 24.8%, followed by UK property companies at 21%. The high level of both buying and selling by UK institutions indicates that they are adjusting their portfolios as they now see appropriate opportunities to act, The Property Archive says.
“Initial yields have begun to trail upwards as investors begin to move up the risk curve for certain types of product. Overall the average for Q1 2011 was 6.93% compared to 6.63% in Q4 2010, although Central London showed a continuing lowering of yields to an average of 5.42% compared to 5.58%,” it notes. It says the largest change from Q4 2010 was in offices, at 75bp, followed by industrial property at 65bp.
