Knight Frank's head of commercial research, Claire Higgins, has published her latest thoughts on the UK market outlook in her monthly commercial property review.
In it, she highlights November's IPD figures, which showed the biggest monthly rise in capital values for 15 years - at 2.36%.
"Perhaps even more intriguing was the reduction in the rate of decline in rental
values," she says.
"By which I mean they still went down, but not as much. This is somewhat counterintuitive in a recessionary market which lags unemployment trends, where you'd expect all things occupational to be getting worse, not better. It feels like a monthly blip to me, but perhaps December will have proved me wrong."
On the UK investment market volumes, Higgins says:
The average quarterly volume of investment transactions in the last decade has been £8.8bn, according to Property Data.
Admittedly, the last decade has seen some pretty turbulent levels of activity, ranging from a peak of £17.7bn in the last quarter of 2006 to a low of just £3.9bn in the first quarter of 2009.
The annual volume for last year is currently thought to be c. £21.7bn - about the same as 2008 - but significantly a third of that took place in Q4.
Thus an estimated £7.1bn of transactions in the final quarter of 2009 doesn't look too bad. Not quite up to par, but very much in line with the sort of levels we saw in the early 2000s, before things started getting a little crazy.
What has been particularly interesting is not just the level of transactions, but the source.
Overseas investors have pretty much dominated throughout the downturn. If we
take the market trough as being from the start of Q4 2007 onwards, overseas investors made 34% of all UK commercial property purchases. By comparison, the next largest investor group was the UK institutions, which purchased 20% of the total.
However, one quarter of the purchases made by UK institutions throughout this entire period took place in Q4 2009.
In fact, purchases by UK institutions outstripped those of overseas investors and
accounted for 37% of the quarterly volume. Assuming they can continue to find anything to buy (a pretty big assumption), it's fair to say the UK institutions are back.