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LONDON-Despite the strong investment market, agent DTZ expects a fall in the amount of new money coming into the property sector this year. In its 27th annual Money into Property report it forecasts that a net £25 billion ($39 billion) will be invested in UK commercial property in 2002, down from a record £32 billion ($50 billion) in 2001.

Last year saw record levels of commitment from providers of loan finance and high levels of net investment by property companies and foreign players. Despite this year’s fall, DTZ says the outlook is positive.

Mike Cutteridge, head of UK investment at DTZ said: “2002 is proving to be a good year for investment in UK property and we shouldn’t focus too much on the fall in activity compared to 2000 and 2001 which were both exceptional. I expect commercial property to continue to outperform equities with investors recognising its position as a safe long term investment.”

One of the most positive signs is the return of institutional investors to the market, and DTZ’s survey of institutional investors found that pension funds plan to increase their commitment to property by 10% and insurance companies by 22%. Retail assets remain top of the funds’ shopping list, while they are less keen on London assets.

Investment from overseas players has accounted for about 20% of the total market inn recent years, but total foreign investment in the first quarter of 2002 fell below £1 billion for the first time since 1999. This was mainly due to a decline in investment from the USA. However DTZ forecasts that international investors will still spend £4.8 billion ($7.5 billion) in the UK this year, the third highest total on record.

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