Ellandi hosted a, belated (and slightly alternative), celebration of acquiring the Newlands Centre in Kettering at the Ginger Pig Butchers.

Should you trust a group of surveyors, lawyers and general property spivs with super sharp meat cleaver and red wine - probably not but they did.

Under the careful guidance of master butchers, Perry and Borat (yes, really), we were shown how to carve up a cow. It appears that butchery and surgery are very similar skills. As Pete Mather commented - “I now appreciate my buthcher has more skills than I do.”

We all now know the difference between a Wing Rib and a Fore Rib and where to cut the best T-bone. We were even allowed loose on the meat ourselves and took home a French Dressed Rib butchered by our own hands. Quite handy with my in-laws coming this weekend.

Most importantly, we were fed a huge plate of beef washed down with red wine and followed with Chocolate Braed and Butter Pudding. There was some lettuce but I think everyone avoided that…..Safe to say that we were fat pigs at the Ginger Pig.

It was a great night out and a good way to thank everyone for all thier hard work on the Kettering acquisition. It was also great to report that things are going really well at Newlands.

If any carnivores fancy this www.thegingerpig.co.uk

The whole basis of the capitalist economic system is that there will be willing buyers and willing sellers. Demand and supply will see prices adjust until a price equilibrium is reached at which point buyers and seller will trade.

Unfortunately, in the property market today this equilibrium is missing. It seems to me that this is one of the unforeseen side effects of QE and the lowest interest rate environment that we have ever seen.

Vast amounts of the UK commercial property universe is now in negative equity, where this is not the case a further swathe is owned by funds that on paper have lost themselves, or more accurately their investors, a fortune. Theoretically this property should slowly be recycled through the market, as investors and banks recover what they can and move on to other opportunities but, like rain water falling on a glacier, capital is being frozen up and seemingly removed from the market.

One of the key factors facilitating this is negative real interest rates. Banks are funding themselves via central bank liquidity at nominal rates so they have limited funding pressure to de-leverage and dispose of their real estate loan books. Simultaneously funds are not seeing investors withdraw capital, despite often abysmal performance, as re-investing the capital anywhere that offers any yield is incredibly hard.

There is fresh equity desperate to invest in many asset classes, including real estate, but there is limited available opportunity to invest at what is deemed the appropriate risk weighted return in today’s rather gloomy world.

So the demand and supply lines that always converged in my economic text books are now refusing to meet one another. If willing buyers and the willing sellers rarely meet there can not be any volume of tranasctional activity.

What is anything will break this cycle?

My hope was that governments would start to ween the banks off state funded liquidity, potentially in order to have the capital to fund a rescue of the Euro. This would force banks to reappraise their balance sheets, partially to meet new regulatory capital regimes but more importantly to win the faith in the market required to be able to fund themselves.

True market funding costs will be far higher than banks are currently paying for central bank liquidity. This will create two opportunities; investors will be offered a return on investing capital so they would start to trade out of legacy assets to reinvest in better priced opportunities and bank’s will look at the poor returns generated from legacy loan positions and opt to exit them in order to reduce their funding requirements and maximise return on equity.

The return to rational economic decision making would create a convergence of the supply and demand lines and the market could begin to function again. It matters little at what price this is achieved as long as there is activity. The property industry is far more reliant on the volume of activity than it is as to the value of the transactions.

I had high hopes that this would happen in 2012 but with the ECB announcing it will make even more funds available (€1trillion mooted by Goldman) to bank’s in their February money auction it seems that I may be very wrong. See here.

I fear that we may be a frustrated buyer for a good while longer.

We are delighted to be building the Ellandi team further with the addition of Jaya Sabnani.

Jaya graduated from The University of Westminster in 2008 with a BSc in Urban Estate Management. She has subsequently spent three years working in the property team at Harrow Council.

Initially Jaya will be assisting across all parts of the business and having been responsible for process re-engineering many parts of Harrow’s housing function I am sure she will also be knocking us into shape on the admin front.

Jaya is also a keen blogger so expect to hear from her shortly on the Ellandi blog.