£30bn. Record Investment

in UK Commercial Property.

Net capital inflows into UK commercial property amounted to a record £29.7 billion in 2000 according to the 26th annual Money into Property report from DTZ Research.

 This figure is an increase of two-thirds on 1999 and is by far the largest annual total after allowing for capital value inflation. The increase was driven by record levels of net investment from institutional and overseas investors and particularly high levels of commitment from providers of loan finance.

DTZ Research predicts lower capital inflows in 2001 of about £20 billion against a background of some economic uncertainty but broadly positive commercial property fundamentals. This figure would be the second highest recorded total.

 DTZ's report is based on a comprehensive analysis of institutional, overseas and property company investment and lending activity and is underpinned by surveys of property fund managers and lending institutions.

 The report shows that institutional investment in 2000 was dominated by pension funds that committed £3.7 billion to commercial property. As with last year, property fund managers expect property to outperform other asset classes in 2001 with returns expected of around 9.6% against equities (7.4%) and government bonds (6%). DTZ Research anticipates net capital inflows from institutions of £3.5 billion in 2001.

 Investment from overseas amounted to £8.9 billion in the fifteen months to the end of March 2001 which, on an annualised basis, represents twice the total of 1999 and is 50% higher that the previous highest annual total in 1997.

 The lending community continues to be attracted to the commercial property market with debt outstanding to property companies estimated to be around £81 billion, 30% higher than at the peak of the last ending cycle.

 DTZ Research anticipates total lending could rise to £93 billion by year end as lenders remain attracted to the sector and investors take advantage of the arbitrage which often exists between property yields and interest rates.

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