LONDON-In October, as investors in London continued to hunt for investment opportunities in prime UK assets, aggressive bidding brought prime yields down 35 basis points. This decline is the largest monthly fall since in the market since 1993, according to a recent report by Cushman & Wakefield.

“Investors seem to believe that they will look back on 2009 as an historic low point for pricing so it’s no surprise that buyers are rushing in now so they can claim they made a purchase at the right time,” says David Erwin, head of UK capital markets.

According to the report, “the average prime yield across all sectors is now 6.58% with 21 of the 25 key market segments analyzed now on a downward trend.” As a result both local and international investors are finding that the UK market is experiencing a limited window of opportunity where prime assets are well priced.

“However, with a real shortage of quality property to offer them, some commentators are already worrying that we’re heading back into a bubble,” Erwin says. “Only time will tell if this is right but it’s certainly true that for those that want to sell stock they don’t see as a long term hold, now is a great time to test the market. We can’t see any real equilibrium coming back into the market until property supply increases – perhaps when the banks start to unlock some stock.”

The industrial sector is fairing the best; seeing the strongest overall yield compression. On average the market has seen an average falling of 123 basis points. The retail market is the favorite for investors. The retail warehouses saw yields drop by 85 basis points in October, while the overall retail market dropped 48 basis points.

The office sector fell 44 basis points in October.

Erwin together with Bryan Laxton, UK CEO and David Hutchings, head of the European Research Group, composed the report.

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