Property investors damn capital's transport

AN overwhelming majority of foreign investors in the UK property market believe London's role as a leading financial centre has been impaired by the Government's unwillingness to invest in the capital's transport system.

The findings of a Gallup survey for Richard Ellis, the chartered surveyor, are a further blow for the Government, still reeling from the blocking of the proposed Crossrail underground link between Paddington and Liverpool Street stations.

The poll showed that the UK investment plans of more than 80 per cent of the world's largest property investors had been adversely affected by the Government's unwillingness to put public money into London's transport infrastructure.

More than a third of the respondents, from 68 of the leading property funds in Europe, the US and the Far East, said that London's status as a financial centre had declined over the past five years.

Most believed that a key factor in London's decline had been its relatively poor infrastructure. A quarter believed that London's position would deteriorate further over the next five years, with more than half claiming that the Government was not doing enough to support the capital.

The damning verdict from institutions - which last year spent pounds 1.8bn on London property - came a day after a committee of four MPs blocked the pounds 2bn Crossrail project, embarrassing John Major who had previously over-ruled Treasury opposition to the link.

Despite its perceived problems, London remained a favoured location for property investment, the survey said.

Two-thirds of respondents expected the London market to continue last year's improvement in values, and 40 per cent said they would be increasing their holdings.

Their optimism was given a boost by a monthly index produced by Richard Ellis which earlier this week showed the first rise in retail rents since April 1991. Angus McIntosh, director of research, said: 'It will be a long haul back to normality, but the rental market seems at last to have started the correction process.'