Property investment volumes fell by 8% to £31.4bn last year owing to a shortage of prime assets, according to the latest figures from Knight Frank.
The agent said that increasing investor caution over the economic outlook, a continuing lack of debt and a shortage of prime buildings were to blame for the drop in sales.
Looking ahead to 2012, KF said that income would be the key driver of acquisitions because yield compression was all but over for the immediate future.
The agent claimed the corporate recovery shadow will hang over the property sector for some time, with investors still nervous about entering the market for non-prime assets.
However, it is predicting a drip-feed of properties coming to the market from the banks, and said that investors should not be detered from buying good-quality secondary stock.
“Poor asset selection is a greater threat to an investor than bank stock, and sensible asset management can mitigate other risks,” said the agent.
It added: “A tough start to the year is inevitable, but there will be opportunities for those who do not judge all of 2012 based on a gloomy January.”
joanna.bourke@estatesgazette.com
