In 2011 and 2012, around £32bn was transacted annually. So far in 2013 some £20.4bn has been transacted year-to-end July, up around 18 per cent on the same period of 2012. Given that investment transaction totals tend to be weighted toward year end as fund manager investment mandate deadlines approach and activity levels peak, the total in 2013 is likely to pass £40bn for the first time since 2007 and in line with 2004 when some £41bn was transacted.

There is also evidence to suggest that UK property is turning a corner.  If monthly capital growth figures are tracked and compared against the experience of the early 1990s downturn, then a very similar pattern emerges, albeit this time around, the re-pricings were much more pronounced and much more rapid.
 
The 2007 to 2009 downturn and recovery appears to take on a similar pattern of that seen in the early 1990s, although the re-pricings were faster and more pronounced.
 
Walter Boettcher, Chief Economist at Colliers International said:  “Why did values fall so precipitously in this downturn? One answer may lie in the ‘mark to market’ ethos that gripped valuers across asset classes in the Credit Crunch and the post-Lehmans double-dip when many derivatives were deemed to have nothing short of ‘junk bond’ status. So much for valuation ‘smoothing’ and of course there was really no market to mark to, hence the values fell rapidly toward ‘vacant possession’ value . . . or worse.  As to the speed of the re-pricing, it could be argued that this was the result of the first ‘proper’ downturn in the internet age with immediate communication and reaction.”
 
In the last two months, capital values appear to be moving into positive territory after 18 months of decline and stagnation.  It may be this incipient re-discovery of recovery that is driving investor interest and bumping up transaction volumes, and all this with real estate finance still contracting after three years of deleveraging from a peak of £247 bn of UK real estate lending in Q1 10 to £161 bn in Q2 13 – a 35 per cent reduction.  In the 1990s, a 24 per cent reduction took six years from a peak of £39bn Q2 1991 to £29bn Q1 1997.
 
Interestingly though, in this latest cycle, exposure to UK real estate is still 8.2 per cent of all commercial lending compared to 5.8 per cent  at the nadir of real estate lending in the Q1 97. This is perhaps testament to the greater general decline in lending across all commercial sectors.  In the 1990s, total commercial lending in annual terms never declined.  In Q2 2013, the latest decline shows an 9 per cent overall reduction over the last three years and the latest evidence suggests total lending is still contracting.  Finance led this latest downturn, but the slow deleveraging progress may well be down to the rise of regulatory capital constraints as many have argued, which makes the latest move of property capital values into positive territory all the more remarkable.