Invista sees thawing in UK market

There has been a noticeable thawing in the near-term outlook for UK Commercial Property, driven by increasing economic optimism and tangible evidence of buyers re-entering the commercial property market, according to the latest research from Invista Real Estate Investment Management.

In particular, the research points to a growth in demand, primarily from overseas investors, for prime, well located, long-let properties.

Invista cautioned that these early positive signs had to be considered against the ongoing fall in capital values for UK Commercial Property, which according to IPD figures are down 4.0% for the three months ending June 2009.

But Invista said the falls seemed to be slowing, pointing to a potential stabilisation in capital values. This, together with above trend yields we are seeing, could make the UK commercial property market relatively attractive, the report said.

Mark Long, head of Investment Strategy and Research at Invista, said: 'We are seeing a growing investor appetite for good quality UK commercial property investments, led principally by overseas investors, who are attracted by the high level of investment yields and the relative weakness of sterling. However, the broader investment market is likely to continue to see further falls in values as weak occupier demand continues to push rents down. That said we are cautiously optimistic of the near-term prospects of the UK commercial property market and believe that a recovery in the market will be quicker than in the 1990s providing there are no further shocks to the system.'