Equity buying ‘is driving large commercial property deals’

Posted 03/10/2010

The larger commercial property deals being made over the last six months have been driven by equity buying.

This is the discovery of new research from Savills, which showed that investors are turning their back on lending as a result of the global economic downturn and the effects it has had on banks.

However, the firm did find that more financial institutions were willing to help fund large-scale commercial property purchases, with 12 banks lending at least £100 million each during the six-month period.

Felix Rabeneck, director of central London investment for Savills, said: “The market this year has been largely driven by equity buyers who are in some cases favoured by vendors given the perception that debt is difficult to secure.”

Last month, Ian McBryde, manager of the Isis Property trust, told Fund Strategy magazine that commercial property will retain its appeal because of continuing economic uncertainty.

However, he warned that quick profits in the sector are unlikely given that returns are only likely to reach 11 per cent this year.