Colliers Report Finds Appetite for Property Asset Classes Improves in UK
The economy in the UK shows signs of a weak but sustained recovery, according to a new Colliers International report titled REIF in Brief Q2 2013. Although economic fundamentals remain weak, improved sentiment will enhance risk appetite across all property asset classes. Private investors (domestic and foreign) and property companies will continue to acquire higher yielding properties at a measured pace, capitalizing on the yield differential between London and the regions, prime and secondary.
The report noted that overseas investors will continue to drive the Central London market, pushing down yields and driving overall volumes. UK institutions will remain largely “priced-out” of the capital city and will continue to look to the regions for investment, predominately the southeast region, for core and core+ opportunities.
As the economic recovery gains traction, shareholder pressure may initiate a new phase of corporate investment. As a result, occupier markets will strengthen, and lack of supply will create rental pressure. This will persist until lending markets improve and development increases, according to the report.
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