Aberdeen Property Investors said it expects its UK commercial property to post 9.2 percent annualised returns over the next five years, as the recovering sector becomes more attractive than lower-risk asset classes.
The property investment unit of Aberdeen Asset Management said on Monday it bought about 250 million pounds ($408 million) of UK commercial properties in the last three months for institutional clients, and plans to invest an additional 500 million pounds in the next few months.
"Investor interest in UKCIG property has risen over recent months as property has looked increasingly attractive, relative to other asset classes, from a yield perspective," Aberdeen Property, which manages about 21.7 billion pounds globally, said in a statement.
British commercial property values rose 3 percent in December, the largest monthy rise since records started 23 years ago, as the market recovers after a two-year downturn, although rents continued to fall slightly, data showed on Friday.
The company is forecasting an annualised return of 9.2 percent for the sector from a five year viewpoint, of which about 7 percent will be from income and the remainder from strong capital returns over the next year.
"Competitive bidding for limited stocks in the UK will likely continue to drive capital values up in the short term, bringing in total returns of 16 percent in 2010, despite rents still falling in all sectors," Aberdeen Property said.
In a separate statement, funds manager Henderson said it will re-open the New Star International Property Fund on Feb 12, after successfully disposing of assets and as investors regain confidence.
The fund was suspended in Nov 2008 following a surge in investor redemptions at the height of the global financial crisis,.
The UK Financial Services Authority has since approved stricter redemption procedures for larger investors with holdings over 7.5 million pounds, including requiring a month's notice if they wish to sell shares, giving fund managers more control over liquidity, Henderson said.
UKCIG Property News, January 2010
Monday, January 18, 2010
Commercial property investment across Europe shows 42% rise
Commercial real estate investment has risen 42 per cent in Europe in the past three months compared with the previous three months to the highest level since the collapse of Lehman Brothers in 2008.
More than €25.7bn ($37bn) of property deals were done in the fourth quarter of 2009, double the levels being traded in the first two quarters of the year, according to CB Richard Ellis, the property consultancy.
This is the highest quarterly trade since Lehman's collapse and the beginning of the sharpest point of the property slumpCB Richard Ellis.
The data support anecdotal evidence of a rush back to property investment by a range of institutions after a bounce in values in markets such as the UK since the summer.
The rise in fourth quarter activity brought total 2009 turnover to €70bn, still lower than the €121bn recorded in 2008. Almost every European market saw an increase in investment activity in the fourth quarter.
The UK took by far the largest share of the new investment, with more than a third spent on British property.
Investment in the UK rose 64 per cent in the second half compared with the first six months of the year.
The next largest market was Germany, which accounted for about 15 per cent of investment activity.
The fourth quarter is generally one of the busiest periods owing to the rush of deals being completed towards the end of the year, although CBRE said theturnround was expected to be sustained into 2010.
Michael Haddock, CBRE's director of European research and consulting, said the upturn in investor interest started in the most important European markets but was spreading further in the region.
The strongest growth occurred in central and eastern Europe, an area traditionally seen as higher risk than more established markets in western Europe, although the pick-up came from a lower base.
There was also a significant increase in cross-border investment in the second half of the year.
German open-ended funds alone spent more than €1bn in December, with at least 13 acquisitions across seven markets.
Sovereign wealth funds from outside Europe also contributed to the rise in activity.
UKCIG Property News, January 2010 from Financial Times
More than €25.7bn ($37bn) of property deals were done in the fourth quarter of 2009, double the levels being traded in the first two quarters of the year, according to CB Richard Ellis, the property consultancy.
This is the highest quarterly trade since Lehman's collapse and the beginning of the sharpest point of the property slumpCB Richard Ellis.
The data support anecdotal evidence of a rush back to property investment by a range of institutions after a bounce in values in markets such as the UK since the summer.
The rise in fourth quarter activity brought total 2009 turnover to €70bn, still lower than the €121bn recorded in 2008. Almost every European market saw an increase in investment activity in the fourth quarter.
The UK took by far the largest share of the new investment, with more than a third spent on British property.
Investment in the UK rose 64 per cent in the second half compared with the first six months of the year.
The next largest market was Germany, which accounted for about 15 per cent of investment activity.
The fourth quarter is generally one of the busiest periods owing to the rush of deals being completed towards the end of the year, although CBRE said theturnround was expected to be sustained into 2010.
Michael Haddock, CBRE's director of European research and consulting, said the upturn in investor interest started in the most important European markets but was spreading further in the region.
The strongest growth occurred in central and eastern Europe, an area traditionally seen as higher risk than more established markets in western Europe, although the pick-up came from a lower base.
There was also a significant increase in cross-border investment in the second half of the year.
German open-ended funds alone spent more than €1bn in December, with at least 13 acquisitions across seven markets.
Sovereign wealth funds from outside Europe also contributed to the rise in activity.
UKCIG Property News, January 2010 from Financial Times
Thursday, January 14, 2010
Average UK house price back above £200,000
Information released by the Communities and Local Government (CLG) shows that the average UK house price has now risen back above £200,000. While figures from November show that the rate of increase in the value of property in UK is starting to slow, prices in November were still 0.6% higher than the corresponding period in 2008. However, while house prices are starting to stabilise and consolidate there are signs of growing demand from buyers.
Bizarrely, many people believe that house prices in the UK could actually fall back in 2010 due to increased demand and increased availability. A lack of competition for individual properties, which many people believe is the reason why the average house price has increased so quickly, should at least hold back the final sale price of many properties.
It is ironic that the UK property market, or at least the average property price in the UK, has shown signs of recovery in the latter part of 2009 but could suffer because of increased demand and increased supply in 2010. Whether you could argue that the current average house price in the UK is unsustainable is open to debate but one thing is for sure, those who think that the property market is now back into the boom times may need to think again.
UKCIG Property News, Jan 2010
Bizarrely, many people believe that house prices in the UK could actually fall back in 2010 due to increased demand and increased availability. A lack of competition for individual properties, which many people believe is the reason why the average house price has increased so quickly, should at least hold back the final sale price of many properties.
It is ironic that the UK property market, or at least the average property price in the UK, has shown signs of recovery in the latter part of 2009 but could suffer because of increased demand and increased supply in 2010. Whether you could argue that the current average house price in the UK is unsustainable is open to debate but one thing is for sure, those who think that the property market is now back into the boom times may need to think again.
UKCIG Property News, Jan 2010
Tuesday, January 5, 2010
UK construction shrinks for 22nd month
The hard-pressed British building industry suffered its 22nd successive monthly fall in activity in December, a closely watched survey of the sector revealed today.
The compilers of the CIPS/Markit Construction survey blamed the fall on subdued demand as new orders fell in December after a small upturn in November.
Contractors also cut the number of staff again last month.
However, construction companies remained confident that a recovery will occur in 2010, CIPS said, although David Noble, the chief executive of the Chartered Institute of Purchasing & Supply, said: "Whether this optimism is based on hope rather than foresight on orders in the pipeline remains to be seen.”
The seasonally adjusted CIPS/Markit Construction Purchasing Managers’ Index edged up to 47.1 in December, from 47 in November, a pace of contraction that was broadly unchanged from previous months.
A figure below 50 indicates that activity is falling.
Although both commercial and civil engineering businesses saw further declines in activity during December, house building increased for the fourth successive month and at its fastest rate since August 2007.
However UK construction companies were also battling with a further rise in input prices in December.
Mr Noble said: “Unlike other parts of the economy, the construction sector seems unable to escape the shackles of the recession, as it entered its 22nd successive month of decline.
"Contractors are competing aggressively to secure the relatively fewer new contract tenders there are in the market...There are some glimmers of hope.
"Most significantly, the residential sector showed a marked improvement in activity. This suggests that the increase in house prices last year is beginning to have an effect on construction and encouraging new building."
UKCIG Property News, January 2010
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