This is according to research published by national commercial property consultant, Lambert Smith Hampton (LSH).
LSH’s quarterly survey of UK property investment (UKIT) identified that the market’s key indicator – transaction yields – improved in the quarter September to December 2009. The 61 basis point movement, to reflect an all property transaction yield of 6.99%, was the largest shift since the survey began in January 2000.
LSH chief executive, Ezra Nahome, said: “Property returns are almost 4% above the return on ten-year gilts. As a result there is an overriding perception that property is good value.
“The improved sentiment, coupled with an increasing flow of funds, saw institutional buyers strongly return to the property market in the last quarter of 2009, purchasing £2.8 billion worth of property and selling £2.5 billion, leading to net investment of £320 million.”
Following a slow first half to the year, total investment activity of £24.6 billion was recorded for 2009, only marginally down on the previous year’s figure. While this is the lowest annual value of investment market activity since 2001, the market staged a significant recovery in the second half of the year with transactions to the value of £14.7 billion.
LSH’s research identified that the UK’s north east and east regions experienced the biggest increase in sales activity, with a jump of 70% and 60% respectively. In contrast, Greater London and south east activity fell 4.6% and 10% respectively.