The property market in the UK is showing signs of stability after more than two years of declining property prices.
The British Land Co. PLC, the second-largest real-estate investment trust in the United Kingdom in terms of market capitalization, disclosed the latest evidence on Tuesday. It started making acquisitions and reported the first growth in the value of its assets since 2007.
According to the company, factors including the limited stock and the positive shift in investor appetite have helped market valuations since June.
British Land’s performance reflects the previous week’s results from Great Portland Estates PLC, a landlord from central London. It said the worst conditions of the property market were over.
Both developers remain wary about the outlook. British Land warned that the volumes of transaction remained short and was "mindful that the waves caused by the financial maelstrom of the last two years have not yet settled."
Based on the Investment Property Databank Index, British commercial property in October posted a 1.9 percent capital growth for the third consecutive month. Capital values were driven by returning liquidity and improving sentiment. However, the recovery seems to be fragile. "As long as the negative rental cycle persists, so will the concern that the upward trend in capital values could be broken," said the IPD.
However, landlords are now returning to the market to make acquisitions.
Earlier this month, British Land created new executive roles to get ready for investments and acquisitions. Chief Executive Chris Grigg told reporters on Tuesday that he was screening an additional GBP2 billion of possible investments, made further bids for GBP500 million of property and had invested GBP128 million in Central London and retail offices.
The bulk of the outlays will be invested in the core markets of offices and retail of the company. Around 3 percent of the assets of British Land are in Europe.
While Alan Carter of Evolution Securities said there were "lots of concern about the economy, tenant demand, bank debt and how it all pans out, which is understandable,” Nan Rogers, an analyst at Arbuthnot, said she was "less optimistic than the market as to the outlook for investment property.”