08. Februar 2010 
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Largest ever quarterly capital growth in Q4, delegates told
As reported earlier this week, the final quarter of 2009 saw 99 separate trades worth just under £1bn, bringing the annual total to just over £3bn - the lowest annual turnover level since 2005. Nonetheless, the fourth quarter completed a full year of continuous steady growth in activity.
Ahead of the briefing Nick Scarles, Chairman of the IPF PDIG and Grosvenor’s Group Finance Director, said: “It is reassuring to see a fourth quarter of continuing increase in derivative volumes; but the milestone was PRUPIM kickstarting sector activity with its £100m of sector trades with RBS. Sector trades open the market to a wider group of end users, who have been held back by the inability to trade in the sectors in which they specialise as well as portfolio manages seeking to fine tune their sector exposures.”
Economic perspective and Q&A session
The breakfast briefing – chaired by Kevin Aitchison, CEO at ING Real Estate – also included an economic outlook by the Financial Times’ John Plender and a Q&A session on the UK market with DTZ's Robert Peto, vice-chairman of capital markets and RICS president-elect, Great Portland Estates’ chief executive Toby Courtauld as well as Invista’s Owen.
Chairman Aitchison set the tone for debate suggesting the domestic economic recovery relies on a several major “changes, challenges and hurdles ahead of us.” He asked: “When will the tenant market improve; when is rental growth going to come back; what will be the impact of the general election and what about interest rates?”
The rental theme resurfaced in the Q&A by DTZ's Peto. He told delegates: “The pressures on occupiers are not going to go away anytime soon, so we have a rental problem for the foreseeable future. Currently yields are positive – a big signal to buy which has been acted upon – but this is arguably because there is nowhere else investors feel comfortable putting their money. As a result, insurance companies and pension funds have been increasing their allocations to real estate.
“There is still relatively little equity or debt available at the moment which, at some point, could direct us into a ‘cost/push’ position.”
Answering a delegate question on rising void rates across the UK, Great Portland Estates’ Courtauld argued the capital had shown signs of an improvement. He said: “On void rates, London has now turned a corner: the central London average is slightly north of 10%, in the city it is higher, in the West End it is under 10%. From our own portfolios we have seen vacancies reduce – we are seeing demand rising.
“But I would also argue that London is a market where investors do not rely on rental growth: what matters is where the capital coming from and yields. You take a view and get in and you get out again.”
In his global macro economic overview, the FT’s John Plender reminded delegates: “This time last year, most people were in a state of manic depression; yields by historic standards were out of whack – with property cheap, particularly for international investors who benefited from the depreciation in sterling. But the prospects for property are always intimately bound up with the state of the economy.”
An analysis of the investment landscape, driven by global capital flows was, he argued, was required to put the state of the UK commercial property into its proper context.
Ahead of the briefing Nick Scarles, Chairman of the IPF PDIG and Grosvenor’s Group Finance Director, said: “It is reassuring to see a fourth quarter of continuing increase in derivative volumes; but the milestone was PRUPIM kickstarting sector activity with its £100m of sector trades with RBS. Sector trades open the market to a wider group of end users, who have been held back by the inability to trade in the sectors in which they specialise as well as portfolio manages seeking to fine tune their sector exposures.”
Economic perspective and Q&A session
The breakfast briefing – chaired by Kevin Aitchison, CEO at ING Real Estate – also included an economic outlook by the Financial Times’ John Plender and a Q&A session on the UK market with DTZ's Robert Peto, vice-chairman of capital markets and RICS president-elect, Great Portland Estates’ chief executive Toby Courtauld as well as Invista’s Owen.
Chairman Aitchison set the tone for debate suggesting the domestic economic recovery relies on a several major “changes, challenges and hurdles ahead of us.” He asked: “When will the tenant market improve; when is rental growth going to come back; what will be the impact of the general election and what about interest rates?”
The rental theme resurfaced in the Q&A by DTZ's Peto. He told delegates: “The pressures on occupiers are not going to go away anytime soon, so we have a rental problem for the foreseeable future. Currently yields are positive – a big signal to buy which has been acted upon – but this is arguably because there is nowhere else investors feel comfortable putting their money. As a result, insurance companies and pension funds have been increasing their allocations to real estate.
“There is still relatively little equity or debt available at the moment which, at some point, could direct us into a ‘cost/push’ position.”
Answering a delegate question on rising void rates across the UK, Great Portland Estates’ Courtauld argued the capital had shown signs of an improvement. He said: “On void rates, London has now turned a corner: the central London average is slightly north of 10%, in the city it is higher, in the West End it is under 10%. From our own portfolios we have seen vacancies reduce – we are seeing demand rising.
“But I would also argue that London is a market where investors do not rely on rental growth: what matters is where the capital coming from and yields. You take a view and get in and you get out again.”
In his global macro economic overview, the FT’s John Plender reminded delegates: “This time last year, most people were in a state of manic depression; yields by historic standards were out of whack – with property cheap, particularly for international investors who benefited from the depreciation in sterling. But the prospects for property are always intimately bound up with the state of the economy.”
An analysis of the investment landscape, driven by global capital flows was, he argued, was required to put the state of the UK commercial property into its proper context.
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