Institutional investors put more money into commercial property last year than any year since the 1970s.
Their net investment totalled more than £1bn in the final quarter, according to a new report by Lambert Smith Hampton and research company Property Data. This reflects the news from IPD that there has been a major shift by institutions into property.
Net investment by institutions for the year reached £2.3bn a swing of almost £5bn from 2003, when net disinvestment by institutions exceeded £2.5bn.
This is the first time since the 1970s that institutions have shown so much commitment to property, the report says.
LSH head of national investment Ezra Nahome explained: “The combination of gearing and private equity promoted through fund management vehicles has proved to be an exciting one, generating positive cash returns and opportunities for capital growth not seen before in the commercial property investment market.”
But he added: “Mainstream institutions are having to be more creative with their existing portfolios by creating geared vehicles in order to generate better returns.”
A total of £14bn was spent on commercial property in the last three months of 2004, the highest quarterly figure ever recorded in the UK.
Quoted property firms showed the most dramatic turnaround: a £3bn disinvestment as they finished cleansing their portfolios in the first half led to a £760m net investment in the second half of 2004.
References: EGi News 07/03/05
