INVESTOR CONFIDENCE IN COMMERCIAL PROPERTY SOARS

Primepitch/Property Week survey reveals more optimism about the economy.

View Survey Results

By Natalie Stevenson

Private Investors are more likely to invest in commercial property than they were three months ago.

This is the key finding of the second quarterly survey of 600 private property investors by Property Week and PrimePitch, an online forum for private investors.

The survey reveals that business confidence has grown in the last quarter with the percentage of respondents who feel optimistic about the economy rising fourfold from 9% to 33%.

Investors are positive about the commercial property sector and believe it will perform almost as well as the stock market over the next year.

James Tanner, head of property consultancy at PrimePitch’s owner, Property Investment Exchange, said: ‘With the war [in Iraq] over there has been a big reduction in pessimism. The nervousness about the stock market makes property a good alternative for investors.’

Half of those surveyed said that, because of the instability of equities, they would be more likely to buy commercial property. Investors believe the capital value of retail and industrial properties will rise – a trend seen at auctions where these properties are attracting premiums.

Tanner said that although retail was always popular with private investors, the lack of office and industrial lots at auction, coupled with desire for a balanced portfolio, has stimulated demand even further.

Investors sentiment towards offices have also improved, with almost half the respondents predicting that falling values would level off in the next six months.

The appetite for commercial property has driven prices up, leading to increased sales at auction. A total of 60 per cent of respondents believe a higher price would be paid at auction than by private treaty.

The positive results coincide with the launch of the Propex Professional website (see news, 1 August, p4) which gives investors a screen-based trading platform.

Tanner said: ‘There are more smaller deals being advertised and vendors are making an effort to reach smaller private investors through their agents. The website will include extra third-party information such as financial news and comparable data.’