The total value of property derivative trades matched the value of commercial deals for the first time in January.
According to property derivative brokers, there was a record £1bn of trades carried out in during the month, and they indicate an increasingly fearful market.
The volumes compare favourably with the £1.7bn of trades that IPD said were carried out in the last three months of 2007.
Alex Dewey, co-head of property derivatives at Cushman & Wakefield BGC, said that, according to latest agency reports, the figure matched the amount of direct property deals in January.
“There is far more market uncertainty than there was a year ago, so it is not so surprising that we are already seeing strong volumes this year,” said Dewey.
“Uncertain markets see a greater use of derivatives because you can hedge that uncertainty.”
Phil Ljubic, a director on ABN AMRO’s property derivative team, also said there was £1bn of trades in January, adding that it was the team’s “strongest month yet”.
Ljubic said he believed that the 2008 property derivatives market would be double that of last year, which saw £7.2bn of trades.
According to IPD, there were 214 trades in the fourth quarter, which also saw the gap between UK derivative trades and direct property and development close to its narrowest yet.
The amount was more than double the 96 trades of the previous quarter.
However, the total value of property derivative trades in Q4 remained the same as for the third quarter, at £1.66bn.
There have been a total of £13.3bn of property derivative trades since the products were introduced in 2004.
Ian Cullen, co-head of IPD said: “The rapid fall in commercial property returns over the past six months has awakened broad interest in property derivatives as a means of better managing property exposure in difficult market circumstances.”
