Second half recovery set to boost 2009 deals to £23bn

UK investment transactions are expected to total between £22bn and £23bn by the end of 2009, representing a big pick-up in activity in the second half.

The Property Archive estimates that there were only £8.7bn of deals in the first half. Julian Stocks, head of England capital markets at JLL, said: “It has been a year of two halves. The first six months were characterised by low volumes, falling prices and worsening occupational markets.

“Then investor sentiment dramatically changed and confidence formed over the summer, resulting in demand for stock outstripping supply, which led to higher prices and rising activity.” A final figure of £22.5bn would be 10% up on 2008 and is comparable to investment levels in 2001, JLL said.

The agent hopes turnover  will continue to increase and is predicting that transactions will total £30bn in 2010. Stocks said investors would remain confident that UK property – especially at the prime end of the market –  offers an income return that compares well with other assets, and very low interest rates.

He said investors had already started to look at “opportunities that do not fulfil the criteria they were originally seeking, taking a view on income risk through shorter leases or considering towns or markets regarded as more secondary”.

JLL expects more stock to become available. “Prices have recovered enough for banks and other opportunistic sellers to take advantage of a rising market,” the firm says.