Investors poised to pile into property

MORE than pounds 10bn is waiting to be invested in the UK property market, which would revitalise the sector and generate a boom similar to that of the 1980s, according to a report from surveyors DTZ Debenham Thorpe.

DTZ, part of the team that advised Greycoat shareholders to accept the unsuccessful bid from Postel because it believed the company would have trouble selling its properties, claims the prices of commercial properties are soaring.

The report, produced by John Rigg, DTZ's head of research, says property yields (the rental income of a property divided by its price) have dropped by around 2 per cent since the beginning of August. This would imply that prices have increased by more than a fifth in just two months.

Mr Rigg believes institutional investors are desperate to invest in the property market, and have earmarked around pounds 7bn for this purpose. In addition, property companies, many of which have raised money from rights issues in recent months, have around pounds 1.75bn, while overseas investors are likely to put in about pounds 2bn.

He says investors have been attracted by the relatively high yields on property compared with shares or bonds, and by the devaluation of sterling, which has made British properties cheap when compared with those on the Continent.

The excitement within the market was demonstrated by the surprise announcement by Scottish Metropolitan Properties that it had sold its Saltire Court development in Edinburgh for pounds 53.1m, 13 per cent more than the asking price when the site was put on sale. The prestigious, but only partially let, site in the lee of Edinburgh Castle attracted five bids at above the asking price.

Chris Turner, property analyst at stockbroker Barclays de Zoete Wedd, says the market is moving so quickly at the moment that it is hard to keep up with the excitement.

He says the Saltire Court deal is just one example of the bidding rush that has been prompted by the weight of money targeted at the property sector.

'Some property companies are putting buildings on sale, then finding they have so many bids that they take them off the market to put them on again at a higher price,' added Mr Turner.

He also said that some investing institutions are buying property shares as a stopgap to park their money while they try to find a way to tie up the money in bricks and mortar.

(Photograph omitted)

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
There are no plans to replace R Kelly at the event
music
News
newsThis 8-year-old boy carried his disabled brother through a triathlon
Sport
The Manchester United team walk out ahead of the pre-season friendly between Manchester United and Inter Milan at FedExField
transfers
Life and Style
fashionHealth concerns and 'pornified' perceptions have made women more conscious at the beach
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Java developer - Banking - London - Up to £600/day

£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

Liquidity Reporting-Basel III-LCR-Bank-£400/day

£400 per day + competitive: Orgtel: Liquidity Reporting - Basel III - LCR - Ba...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz