Jones Lang LaSalle predicts return to growth

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by Lin Freestone

According to Jones Lang LaSalle’s recent Credit Crunch report, the UK investment market will avoid a recession and return to growth in the next two to three years.

The re-pricing of property which has occurred in the past six to nine months, and which has brought the yield gap between prime and secondary assets back into the market, is seen as a positive step.

This is specially the case for investors able to capitalise on the opportunities as they become available.

Scott Campbell, from Jones Lang LaSalle’s Capital Markets team, notes that the more experienced players in the UK property market are watching with interest as market prices have dropped over recent months.

He says there is now a wall of money from these investors waiting to re-enter the market, but this is unlikely to drive the market into another boom period.

He considers that the astute investors responsible for these funds are seeking value opportunities and will not chase the market and drive a sharp upturn.

The Credit Crunch report highlights that the continued tight supply of credit to both the commercial and residential markets is having an undoubted impact upon the UK property market as a whole.

However, whilst the market has undoubtedly slowed down, there is still strong demand when good quality assets come to the market.

The report also highlights that the property investment volumes, which fell back considerably in late 2007, remained extremely low for the first quarter of 2008.

The reduced loan to value ratios on offer from the major lending banks resulted in a dramatic reduction in the number of investors chasing the larger lot size transactions.

With the majority of pension funds still inactive, the larger lot sizes are proving difficult to sell.