Assets finding safe haven in Britain – report

EXPO REAL - International Trade Fair for Comme...

Safe as houses: assets bolt for Blighty's bricks

Economic jitters weigh heavy as property market indicators flatter to deceive

By ECM Plus staff

ECM Plus +++ The latest ‘Property Snapshot’ by real estate analysts Colliers International reveals that the lack of robust property fundamentals continues to be more than offset by international economic and political fear.

According to Colliers, safe haven investment is now flowing into British property, in what it calls ‘a defining market feature.’

Key new findings for the economy, Colliers said that despite a positive Q3 of 2011 GDP outturn, uncertainty and concerns about Britain’s economic prospects, what it calls the ‘Eurozone fallout’ and financial issues continue to restrain capital investment and consumer spending substantially.

For investment, Colliiers said volumes remain low, although several large-scale City assets are understood to be under offer. Despite negative sentiment expressed at this year’s Expo Real in Munich, City of London office asset prices are holding up. Foreign buyers continue to sustain prime values, though outside London activity is limited to smaller assets across commercial segments and a handful of distressed portfolios, it said.

For retail, Colliers said the sector is suffering from great uncertainty with respect to the durability of consumer spending and the prospect for retail trading. Outside London, rental declines continue and high void rates continue to plague many high streets.

For commercial property and offices, Colliers said small to medium sized lettings continue to support the London market; conversion of larger requirements in core areas remains sluggish. Regional markets continue to improve.

For industrial investment, recovery continues to be a slow uncertain process, although West London, Heathrow and the South East continue to surprise with strong demand for prime sites.

For residential property, house prices remain ‘stable’, while mortgage lending volumes and terms are not improving.

Walter Boettcher, director of research and forecasting for Colliers said: “Government austerity plans are impacting, although government still made a positive net contribution to Q3 2011 GDP growth. Public sector employment fell by 72,000 in Q2 2011, worryingly, private sector employment also contracted by 4,000 after a few quarters of growth. Demand conditions in the consumer economy remains weak. Wage growth remains very weak and household disposable income was down by 3 percent year-on-year in August. The household saving ratio also rose significantly in Q2 2011 to 7.4%, indicative of the extent of household uncertainty.”


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