Opportunistic investors will benefit in medium term

A confidence survey from Jones Lang LaSalle says pressure on REITs, banks and retail funds, will benefit opportunistic real estate investors over the medium term.

Three factors will benefit opportunistic investors in real estate, according to property services firm Jones Lang LaSalle.

In its Commercial Real Estate Investor Confidence Survey, the firm said the immense pressure on UK REITs to raise equity could result in good quality assets coming to the market, while banks try to reduce their real estate exposure and retail funds have to meet a further round of redemptions.

The survey overall found that the deterioration in confidence in the commercial real estate investment market has softened in the first quarter of this year. The firm canvassed the views of nearly 300 principals and lenders in the UK commercial real estate investment sector.

Singling out opportunistic investors, the report said the pressure on REITs, banks and retail funds “could benefit opportunistic investors willing to take the medium-term view”.

Julian Stocks, head of capital markets England, said: “These factors could result in a rise in activity over the second quarter of 2009 as opportunity funds and equity rich investors compete.”

However, he also warned investors needed to be aware that rents would continue to fall this year as vacancy rates increase and the recession bites further. “Encouragingly we believe 2009 will be the last year of negative total returns in this cycle,” he added.