Falling property values in the UK has led to increased interest from investors looking to add to their portfolios. A survey by Lloyds, who are one of the largest lenders to the property sector, found nearly a third intended to spend more money on shopping centers, apartments, and offices.
In January, FT reported that buyer sentiment was at its lowest level for two years, and this increase in enthusiasm could be construed as a sign that investors believe the market is nearly at the bottom of the current cycle. This trend is being helped by increased liquidity in the banking system due to the European Central Bank’s new program of refinancing. In spite of this transaction volumes are likely to remain at lower levels in most areas of the country, with the exception being central London.
The continuing Eurozone crisis is also expected to negatively impact the markets, at least in the shorter term, and not everybody has a rosy view of the real estate market. Some 87% of the larger investors surveyed expected the Eurozone crisis to negatively impact trading, compared to 77% in January.
Those fund managers surveyed were much gloomier about a recovery, and expect values to fall over the next six months or so. They don’t expect rental values to rise, except for select London offices. However most expect this year will signal the bottom of the current property market cycle.