Investors poised to pile into property
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.
- 1 VMAs 2015: Was Nicki Minaj and Miley Cyrus' awkward acceptance put-down real or staged?
- 2 If you're not already angry about the migrant crisis, here's a history lesson to remind you why you really should be
- 3 Rules on 5p plastic bags likely to lead to arguments at the check-out
- 4 Chaos breaks out in courtroom as father attacks killer of three-year-old daughter
- 5 I like Corbyn, but let's face it: we don't need another white man at the head of a political party
VMAs 2015: Was Nicki Minaj and Miley Cyrus' awkward acceptance put-down real or staged?
Bank Holiday Monday opening times: Are Tesco, Asda and other supermarkets open today?
Rules on 5p plastic bags likely to lead to arguments at the check-out
The nine most warmongering countries in the world revealed
Isis releases graphic video showing four Shia 'spies' being burned alive in Anbar, Iraq
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...