Knight Frank upbeat over office investment outlook

Office developers with strong equity positions in their portfolios stand to benefit from the nervous financial market in the North West, according to Knight Frank.

David Porter, partner in the Manchester office, said the cautious market would not scare off traditional development deals. He added: "The North West office market still presents attractive opportunities in the form of development-led investments with a host of buildings being marketed. It is widely acknowledged that pricing remains very aggressive for the appropriate opportunity in this sector."

He added: "Strong occupational interest continues in an investment market, which is adapting to financial market uncertainty by placing more emphasis on add-value situations, which are more likely to be development-led.

"This is set against a backdrop of very strong regional performance and the fastest growing economy in the UK, subsequently giving investors the comfort they need to pursue opportunities."

Porter added: "Predictions are for an evolving market in the first half of '08. Companies in a strong equity position will continue to see many exciting opportunities, although this may change in the latter half of the year as the funds and institutions re-group and re-enter the market.

"Yields will fluctuate on less prime products, but core products and opportunities will always be hotly contested by investors.

"We have seen a significant play on yields in recent years. However, the market is likely to revert to traditional drivers and the most significant one is going to be income and its performance in 2008."