Drivers Jonas warns of recovery over-enthusiasm in UK

The latest UK investment report published by broker Drivers Jonas suggests that prime property values are rising and investors should be looking at the market. But the report warns against expecting a return to 'business-as-usual'.

The report supports the widely held belief that the sharpest falls in values in the UK seem to be in the past. There is evidence, according to Drivers Jonas, that prime property values have stabilised and selective sectors are seeing growth. Further value falls will be driven by the weakness of the secondary property market.

Other positive aspects are that the hiatus in development activity will drive rental growth in the future, London is 'awash' with international capital seeking opportunities and a significant amount of equity has been raised for new property funds. The report notes that investors are chasing limited amounts of good quality stock.

But there are also potential pitfalls. Drivers Jonas said continuing falls in rent and increasing voids could cast a shadow over the market into 2010 and lending will remain low.

While acknowledging great opportunities are available, the report also warns against over-enthusiasm and stresses the need to remember that the outlook remains an uncertain one. In particular they warn of 'recovery over-enthusiasm' and the report states that, even with the economy on track to follow the consensus path, its continued weakness over the next 18 months might spook some buyers - those who thought we were back to 'business-as-usual' and may have been considering the less-than-prime stock.