DTZ, part of UGL Services, a division of UGL Limited (ASX: UGL), presented the findings of its flagship Money into Property 2012 UK report to over 140 guests today at The Property Debate event, held at the Leeds Metropolitan Hotel.
DTZ’s report revealed UK invested stock shrank 1% to GBP 537 billion in 2011, while other major markets on the continent and elsewhere grew.
Tony McGough, Global Head of Forecasting and Strategy at DTZ, commented: “Falling debt in the UK confirms that this market has a bigger debt problem than most other European countries. However, it is also ahead of others in working through its legacy debt issues.”
In the UK, the equity component, which is smaller, rose by 4% but this growth was not sufficient to outweigh a 4% decline in the larger debt component of invested stock. This fall in debt marks the UK out from most other major markets in Europe, as banks continued to reduce their lending books.
Investment activity in the UK fell back 10% in 2011, primarily due to a lack of debt availability and a mismatch in pricing expectations between vendors and potential buyers.
Tim Cameron-Jones, Senior Director at DTZ in Leeds, comments: “Changes in bank activity will continue to play a significant role in the Yorkshire property market. As traditional bank lending continues to tighten, which includes Yorkshire Bank closing their new property loan book, other lenders will step in. We are yet to see a significant number of deals in the region with institutions taking the role as lender, but interest from this sector is increasing.
“The other significant area of bank activity is their loan work out. UK banks have taken the lead in reducing their exposure to property and we expect this to continue, with more properties released this year through ‘consensual’ sales between bank and borrower.
Tim continued: “Lack of new development and the lock down of prime assets by existing owners means that the prime market is very overcrowded and investors seeking opportunities in the Yorkshire market will need to look to non-prime assets to satisfy their requirements. Low vacancy rates in many sectors in the region means that this is a less risky proposition than many investors believe and understanding the dynamics of the occupational market is key to investing well.”
Martin Davis, Head of UK Research at DTZ, added: “The UK will continue to provide good opportunities for investors. Not only does DTZ’s latest Fair Value analysis indicate that the UK market has become attractive to investors, it is also out-performing the broader European markets. Further DTZ research has shown that non-prime property is less risky in general than the current consensus view among investors. As they consider non-prime markets more actively, investors should find more attractive opportunities for acquisition.”
The launch of Money into Property in Leeds was followed by ‘DTZ’s Property Debate’, held at The Met Hotel in Leeds with over 140 guests in attendance. Panellists including, Derek Bald, Santander Corporate Banking; Stephen Herring, BDO LLP; Gerald Jennings, Land Securities; Neil McLean, Chairman Leeds LEP; Campbell Carruth, Harworth Estates, UK COAL Group, debated the key themes to emerge from the report and other real estate issues affecting the region.