Sharp rise in Investment Climate Index in UK

European property investors appear to have largely put the gloom behind them after a significant deterioration in sentiment in the second half of 2008, according to Union Investment's Investment Climate Index.

The index rose for the first time since autumn 2006 in France and the UK. Union Investment said this reflected growing confidence among investors in those countries with regard to both their own business prospects and the state of the property market in general.

Although changes in the index were broadly similar in the three core markets surveyed, analysis of individual values revealed clear differences that highlight the UK' traditional role as trendsetter. 'The sharp rise in the UK by 12 points to 65.5 points - the biggest movement we have recorded over the past four years - suggests that the savage correction in London is beginning to tempt British investors back into the market,' said Olaf Janßen, head of property research at Union Investment.

In contrast to the positive trend across all UK indicators, the survey responses from German and French property professionals indicates that the decline in these markets over the past year has at best been halted. After last year's major drop, the climate index in Germany moved sideways and currently stands at 62.1 points. In France, there was a slight increase in the index, which rose 1.8 points to 63.4. Despite the positive trend, national indices remain at a low level overall, with sentiment being conspicuously more volatile in the UK. This suggests that the investment climate in Western Europe will remain subdued for a while yet.