According to the latest data from Savills, unveiled in the real
estate company’s February Market in Minutes Report, the UK commercial property sector has remained
strong due to continued investment from foreign parties. These overseas
investors clearly still see value in UK property despite the uncertainty to
arise in the wake of the Brexit vote, which is sure to be a weight off the
shoulders of many of the UK’s property owners and business leaders.
The aforementioned report shows that investment in UK
commercial property rose by as much as 66% in January as compared to the same
month last year, reaching a figure of £4.2 billion. Likewise in 2017, total
investment into UK real estate reached £65.4 billion, representing a 26%
increase on 2016’s annual total. Average UK prime yields remained static in
January at 4.52%, around 30 basis points lower than the same point in 2017.
According to Savills, the office and industrial sectors bolstered
the market heavily with overseas investors responsible for nearly half of total
volumes, of which Asian investors were the most active, accounting for a fifth
of all investment.
Mark Ridley, CEO of Savills UK and Europe, commented,
“January’s volumes demonstrate that investors are still looking beyond Brexit
and are happy to commit to the UK to secure prime property with secure income
characteristics. Based upon current projections, driven by a downward shift in
equivalent yields, we expect total returns for average UK commercial property
to be around 7% this year before weakening slightly for some of 2019 as
investors take a ‘wait-and-see’ approach as the UK officially leaves the EU.”
Steve Lang, Director of Savills’ Commercial Research Team,
added, “This February marks the 10-year anniversary of the first Market in
Minutes in 2008. Back then, average UK prime yields rose by over 120 basis
points during the year, development activity indicators had slumped and GDP
expectations were slashed. Compared to this, the impact of the Brexit vote is
relatively mild. In addition, you would have been hard pushed in 2008 to have
predicted the explosive growth in online shopping over the past decade which
has largely driven occupier demand, and therefore investor appetite, for
industrial space.”
Sam Bonson
Sam is an aspiring novelist with a passion for fantasy and crime thrillers. He is currently working as a content writer, journalist & editor as he continues to expand his horizons.
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