Annual property derivatives trading volumes remain robust, says IPD

The total volume of IPD Index Property Derivatives traded over the final quarter of 2008 was slightly down on the previous quarter, falling to £1.03 bn (EUR 1.15 bn), according to data released on Monday by Investment Property Databank (IPD). Annual volumes held up exceptionally well with £7.73 bn worth of trades compared with £8.3 bn in 2007's record year, the IPD figures show.

A total of 164 trades were executed in the fourth quarter of 2008, boosting the annual total to a record 915 although the average outstanding deal size fell to £9 mln from £13 mln at end-2007.

In the UK, the total notional value of deals completed over the quarter stood at £979 mln, amounting to £7.07 bn over the full year, comparing favourably with the £7.2 bn recorded over 2007. Consistent with the global picture, UK trade numbers increased over the year, to 802 against 553 in 2007.

The nascent French and German derivatives markets both saw significant falls in trading volumes compared to the previous quarter. There were just five French trades worth £40 mln and three German trades worth £10 mln. Annual trading volumes for France were £384 mln in 55 trades, while Germany, in only its first full year for recorded trades, recorded £253 mln in 53 trades.

Ian Cullen, co-founding director of IPD and head of Systems and Information Standards, said: 'While turnover in the over-the-counter property derivatives market still remains at just under half that of the institutional direct market, absolute levels are holding up better. However, with the addition of an exchange-cleared alternative trading platform by Eurex later this month, we may see the differential between two markets narrowing before the end of the year.'