Upbeat trend in property market
Despite challenging times, it is encouraging to witness the in-flow of institutional investors and property funds back into the local market over the past year.
Granted, investment activity has been lower than in previous years, however, deals such as La Salle Investment Management's acquisition of Braidwater Retail Park, Ballymena, the sale of Longwood Retail Park, Newtownabbey to Scottish Widows Investment Partnership and that of Marks & Spencer's store in Donegall Place, Belfast, show the market gaining some momentum. Over the course of this year, we have negotiated a number of significant deals involving local and institutional investors, including the acquisition of a Tesco store in Bristol, a prime unit in Glasgow's Argyle Street and the forward purchase of a substantial mixed-use development in the UK.
As 2012 approaches, the greatest challenge for the property market will be attracting new sources of funds for investment, particularly in the case of local investors.
This is not to say that local investors have withdrawn altogether from the market.
On the contrary, they are still seeking investment opportunities albeit principally up to circa £1m to £2m. Cash buyers are also actively engaged in identifying suitable opportunities as property undeniably still yields a better return compared to other asset classes - in particular, properties with a good location offering secure income.
Our recent re-entry into the auction process goes some way towards proving this with an astonishing 93% of the properties in the auction catalogue going under the hammer with maximum reserve prices ranging from £40,000 to £175,000.
Obviously, we have been encouraged greatly by these results and are hoping to replicate them at our auction on December 8.
We are far from emerging from global recession, however, and can only hope that the general economy begins to pick up sooner rather than later, as this is the only thing guaranteed to have a positive and lasting impact upon the property market across Britain and Ireland.
Andrew Coggins is investment director of Osborne King