Drivers Jonas: Market is on the up
Published: 27 August, 2009
New research from Drivers Jonas paints a picture of a market nearing its floor. Market sentiment and investor appetite has significantly improved over the last three months. At the same time the supply of available investment opportunities remains low as liquidity pressure for the institutions and listed property companies has eased, Howard Richards reports.
Some investors have already been tempted back to the market. They have been buying from funds trying to manage cash outflows and property companies with debt repayment issues. These shrewd purchasers have been able to buy on their own terms and generate 10-15 per cent returns on equity on good quality secure assets.
We believe that prime assets with secure income streams have reached a ‘fair value’ level having reacted so quickly to the economic and financial tornado that has ripped its way through our markets over the last two years. Property has an established position as a key asset class and this is especially the case when investors are looking for a secure income return-driven investment.
Those with the ability to buy now may well look back and reflect on the first six months of 2009 as the time when prime property was cheap and the seeds of the best returns were sown. However, it is by no means too late; the window of opportunity is still open. We do not see this being a fast moving market for some time to come and assets will continue to appear for sale as troubled investors look to sort out, or walk away from, debt and tenant issues.
Howard Richards, partner and head of national investment at Drivers Jonas
