Rising investment market limited by supply, says DTZ

A lack of prime investment stock is holding back deals as investors display renewed appetite in the North West, according to Craig Barton, investment director at DTZ in Manchester.

Barton said: "The regional markets in the UK have experienced an increase in investor interest since the very quiet summer period. Some investors recognise that these markets offer good value at the moment and more stable long-term performance. The main factor that will limit volume of deals in the last quarter this year will be lack of supply of investment stock."

Figures from DTZ show that activity across Europe remains focussed on prime assets as occupational markets and economies remain weak, with few investors willing to move up the risk curve. Many markets also remain dominated by domestic and private investors, particularly towards lower lot sizes.

Barton added: "Activity has polarised between larger, very prime assets and very small lots which private buyers can acquire with little or no debt. There is also a weight of funds building from a handful of institutions and well-funded property companies who wish to spend before the end of the year, but many cannot find suitable stock at the moment. I expect there to be a short term rise in prices for the best investments, but this is likely to settle again in the new year as this pool of cash is spent over the next few months."

DTZ researchers found that as markets reach their bottom, there is a general reluctance to sell. With banks being recapitalised and funds starting to show positive inflows, there is little evidence of any forced sales, which will restrict the level of product coming to the market in the coming quarter and could restrain growth in activity in the near term. DTZ anticipates that deals will become increasingly protracted as vendors seek to achieve best price in the current environment.

Real estate investment volumes across Europe continued their upward trend over the third quarter 2009, posting a 30% increase to €13.8bn from €10.7bn in Q2 2009; though still remaining well below the €30bn quarterly average since the beginning of the century, DTZ said.

EMEA: Total quarterly investment volumes (€ million)