IPD Index Property Derivatives soars to new record in Q4

Trading volumes for IPD Index Property Derivatives hit a new record in the fourth quarter of 2007, with the total of 236 trades eclipsing the previous record of 164 trades set in the first quarter of the year, according to figures published by Investment Property Databank (IPD). A total 137 trades were carried out in the third quarter of 2007.

IPD said the total amount traded on the IPD Index Property Derivatives now stands at £ 13.3 bn (EUR 17.8 bn), with the outstanding notional amount at £ 10 bn. While the IPD UK Annual Property Index continues to be the index underlying most trades, trading on the IPD French Annual Property Index continued to gain ground, with the outstanding notional amount up to £ 670 mln from £ 613 mln in the third quarter.

‘The rapid fall in commercial property returns over the past six months has awakened broad interest in property derivatives as a means of better managing property exposure in difficult market circumstances,’ said Ian Cullen, co-founding director of IPD, in a statement. ‘The increase in the number of trades in Q4, which pushed the total number over the 1000 mark since December 2004, indicates that this interest is now being translated into action.’

Iain Reid, chairman of the Property Derivatives Interest Group and CEO of Protego Real Estate Investors, said property derivatives have ‘given investors a real liquidity option against a background of reduced transactions activity, revealing the important role derivatives can play in both the UK and wider international real estate markets. I expect the market to continue to go from strength to strength in 2008.’