A year of turmoil predicted in the investment property market

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by Kay Murchie

With the credit squeeze resulting in lenders tightening their lending criteria and buyers struggling to obtain loans, real estate developer, Great Portland Estates, is warning of a year of turmoil in the investment property market.

In a statement, the group said investment market turbulence is expected to continue, especially for poorly located, secondary properties and rental growth rates are expected to moderate.

The company added that the values of its portfolio was declining rapidly, in the 3 months to the end of 2007, its net asset value per share fell 6.5% to 617p.

The company specialises in central London office investment and development. It said the West End remained in high demand from business tenants while rental values increased in the area by 3.7% during the the same period, improving the company’s overall rental growth value. In addition, vacancy rates were dropping due to strong demand.

In the meantime, Colliers CRE, the property agency, said its investment property arm had been affected by a ‘marked downturn’ in activity in the final quarter of 2007 as the number of completed transactions fell significantly.

Colliers CRE added, however, that it had been protected by its diversification into other areas including professional services and Spanish real estate.