Central London Q1 Investment volumes lowest in three years

Investment volumes in Central London in the first quarter of 2008 reached their lowest level in three years at only £ 2.83 bn (EUR 3.58 bn) according to the latest Central London investment market figures from Cushman & Wakefield. The impact of the credit crunch is the main cause of a decrease in comparison to the £ 3.9 bn (EUR 4.94 bn) in transactions in the first quarter of 2007.

The total turnover of £1.25 bn (EUR 1.58 bn) for the quarter represents an even sharper drop of around 50% year-on-year. According to Cushman & Wakefield figures approximately £ 600 mln (EUR 760 mln) came from deals agreed over the Christmas and New Year period and into the early part of 2008 when a reduction in interest rates and expected further reductions caused some UK retail funds to place a number of assets under offer or exchange at the end of 2007. The settling of prime yields at around 5.5% has caused the return of some German funds, who have accounted for a significant proportion of activity in the first quarter.

Bill Tyser, partner, City investment at Cushman & Wakefield commented: ‘Generally leveraged buyers have found it extremely difficult to find properties with sufficient returns to match a more difficult and more expensive credit market. Therefore whilst there still remains a large weight of investor money prepared to consider acquisition in the market, the lack of credit and low property returns is and will for the time being hamper wider activity and the resumption of a more balanced market.’