UK - An unnamed UK pension fund has acquired a Manchester office development in a £50m (€70m) funding-and-purchase deal, sparking suggestions of a UK pensions property revival.
The eventual value of the scheme, due for completion in October 2008, will depend on lettings agreements yet to be signed. However, Orchard Investment Management, which acquired the asset on behalf of the scheme, said the centrally-located block would likely attract financial and professional services tenants.
This latest acquisition is an indication UK pension funds will soon regain their appetite for domestic real estate following a recent trend to switch allocations to continental Europe, according to Gary Felce, a partner with Orchard.
"There's still an appetite for property. The problem with the overheated market was pricing," he said.
"You saw all property - prime, secondary - priced the same. That's changed. Pension funds will regain their appetite and you'll see more activity in the market."
That said, the timing of the market correction would depend on "how long the banking situation continues", he said. "Pension funds aren't borrowing but they're competing with investors who are, and that's driving the market. Once we're through the worst and the market settles down, they'll begin to invest again."
However, he expressed scepticism over claims of a short-term correction. "I'm personally optimistic but I don't expect to see a change before spring 2008. It certainly won't happen in this quarter," he said.