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LONDON-Consumer confidence in the UK is still high, despite the gathering economic storm clouds, according to the latest Investment Commentary released today by London-based agency Knight Frank. Sanjay Kapila, senior analyst with Knight Frank and author of the report, says, ‘In spite of the economic slowdown, the UK commercial property market is holding up well and has continued to outperform equities and gilts (UK government securities) by a considerable margin.’

The report details the continued attraction of UK institutions to the commercial sector. Net institutional property investment registered just over £1 billion in the first quarter of the year, an increase of 8.3% on the previous quarter’s total. Commercial property maintained its position as the best performing asset class during the second quarter of the year with growth of 8.4% to May compared with a 4.5% fall in equities and 5.3% decline in gilts.

Knight Frank says that there are still many positives for investors to recognise, with overall rentals in the office market remaining strong and still showing positive performance. Whilst the recent job losses in banking and finance together with high tech and telecoms, the service sector still remains sound.

‘Institutional intentions towards property for the remainder of the year are likely to be influenced by the anticipated performance of other investment assets,’ says Kapila. ‘The expected higher return from property should encourage a higher level of investment in the sector.’

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