By Daniel Hunter
Momentum is building in the UK real estate investment market, helped by the wider economic recovery and capital markets reopening, according to a new survey by KPMG.
KPMG’s Quarterly Real Estate Survey found that some of the historical barriers to growth in the industry have lowered and access to capital and investment opportunities has improved. 68 per cent of those surveyed by the firm said they had sought and secured capital in Q2, and 75 per cent rated the availability of investment opportunities on the market as medium to high.
These factors may be behind the heightened sense of optimism imbuing the industry. Over 60 per cent of respondents said they expect access to debt and equity capital to improve further over the next 12 months and investment activity to rise.
However, concerns about the conditions attached to capital remain. 30 per cent said their expectations on debt interest costs had not been met and 21 per cent said they thought it was harder to secure debt in Q2 than in the previous quarter.
One in five said they had not been able to raise the amount of equity hoped for, suggesting that conditions remain stringent.
Completing deals also remains a significant challenge and one in three (36 per cent) said they found the process harder this quarter.
Richard White, Head of Real Estate and Real Estate Tax, at KPMG in the UK, said: “We have seen a significant resurgence in the real estate market over the last quarter; the appetite created by the availability of equity and debt is starting to be satisfied by increased supply. Pricing is starting to become an issue, particularly in relation to central London, but this is forcing the more opportunistic end of the investor base to widen their geographical horizons.”
Andy Pyle, Head of Real Estate Transaction Services, at KPMG in the UK, said: “Investors are hunting down real estate opportunities in the UK market and are keen to invest in a wide range of property types. It is positive to see more stock becoming available, and this will help to get the whole market moving.
“Banks have also proved they are willing to lend to those investing in good quality assets and this availability of finance has helped to stimulate the industry’s wider recovery.
“However, on the flip side it is still more challenging to get a deal over the line; lenders and vendors alike are increasingly demanding in the timetables they set and the conditions they attach. Unfortunately we see no reason for this trend to let up, especially given concerns around pricing."
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