Large scale investors in optimistic mood despite vola...

Large portfolio professional landlords are in a confident mood, with the majority planning to acquire at least one new asset in the coming year, new research suggests.

Handelsbanken’s professional landlord survey - based on nationwide research among large UK investors with an average of 29 properties worth around £14 million each – found that 59 per cent plan to expand their portfolios in the year ahead, underlining their confidence in the long-term value of UK property as an asset class. Just 14 per cent expect to sell some or all their properties.

Some 57 per cent of those looking to buy more properties also plan to diversify into new sectors, with 43 per cent attracted to offices as investors look to take advantage of depressed valuations.

The overwhelming majority of respondents - 92 per cent - expect the value of their portfolio to increase over the next 12 months, with 39 per cent predicting it will grow by over 20 per cent. Only eight per cent thought it will broadly stay the same.

James Sproule, UK chief economist at Handelsbanken, says: “The bottoming out of commercial property prices in Q1 2023 corresponds with reasonably positive sentiment expressed towards the sector in this survey.

Commercial property values saw a major correction in the second half of 2022 as a direct impact of the higher interest rate environment. Average retail property prices were down by 15 per cent, office prices were also down by 15 per cent, and industrial unit prices were down by 25 per cent.

“In addition, there are the ongoing considerations around post pandemic working practices and retailing habits which, until they are more settled, will be weighing on commercial property valuations.”

Geographically, three-fifths of respondents expanding their portfolio are also planning to buy in new regions.

London was cited as the most attractive region over the next 12 months by investors (27 per cent), followed by the South East (26 per cent).

Areas seen as less attractive for property investment are Yorkshire and the Humber and the West Midlands, both attracting interest from only nine per cent of the sample.