The UK remains number one for commercial real estate investment, despite the country’s looming exit from the European Union.
The country has seen a slight dip in popularity since the Brexit vote in 2016, according to the latest BrickVest commercial property investment barometer. In March 2017 nearly one in three (30 per cent) respondents to a survey by BrickVest selected the UK as their preferred commercial real estate investment location, down slightly from 31 per cent in March 2016.
BrickVest’s survey found that a quarter of respondents favour Germany as their second location of choice for commercial real estate opportunities, the same as last year. Less than one in five (18 per cent) selected the US which represents a fall from 21 per cent last year. The same number also selected France – an increase from 14 per cent in 2016.
The Barometer revealed that both German and French investors are less favourable toward the UK since March last year, however. Less than one in five (19 per cent) French and the same number of German investors suggested they prefer the UK in March this year compared to 24 per cent and 22 per cent respectively last year. US investor sentiment towards the UK fell marginally from 23 per cent to 22 per cent.
Despite Brexit and the potential of a second Scottish referendum being called in the next few years, nearly half (46 per cent) of BrickVest’s UK commercial real estate investors selected their home market as their preferred location, up from 44 per cent In March 2016. BrickVest’s UK investors suggested Germany was second (19 per cent), the US (16 per cent) third and France (14 per cent) fourth in terms of preferred locations to invest.
Emmanuel Lumineau, CEO at BrickVest, comments: “Despite Brexit, our latest Barometer shows the UK remains the preferred location to invest in from our global investor base but uncertainty created is beginning to take effect. Since the vote in June, we’ve seen a 72 per cent increase in the number of investors joining the platform. We have seen plenty of appetite from investors for property as an asset class and it is clear that many of our users want to take advantage of the vote.”
Central London stabilises as office investment beats expectations
24th February 2017
Central London’s office market has stabilised following the UK’s Brexit vote, as investment in the sector beat expectations in 2016.
New research from Savills shows that investment turnover reached £15.9bn in 2016, 17 per cent down on 2015, but 45 per cent above the 20-year average and higher than the level the firm predicted for 2016 at the start of last year.
“Despite some recent clarity on what path the UK government hopes to take for our exit from the EU, uncertainty about the likely outcomes of these negotiations is still substantial,” notes Savills. “This makes it hard to chart an accurate path for the London office market over the next five years.”
However, Savills concludes that “the risks of London losing large numbers of jobs to other EU cities has been significantly overplayed”, and that the higher-than-average performance is a sign that investors are taking a balance view of the market’s risk and return.
Heightened occupational uncertainty, as well as structural issues in the retail fund sector, “definitely has led to less institutional investor activity in London over the last six months”, adds Savills’ report, although this was compensated by a surge in overseas investment, partly driven by the weakening of the pound against other currencies.
The most active group of non-domestic investors in London in 2016 were those from the Asia Pacific region, who deployed in excess of £4.7bn in 2016 and accounted for one third of total turnover.
“Of course, if this rise in investor interest was in part motivated by currency movements then it could disappear if the pound starts to
recover, or if the occupational outlook worsens,” notes the report, but adds: “a sharp recovery in the value of the pound looks pretty unlikely at the moment”.
Central London office investment to top £17 billion
6th January 2017
Investment in Central London offices is expected to have topped £17 billion in 2016, as the city’s commercial property remains attractive, despite the UK’s vote to leave the EU.
According to international real estate advisor Savills, turnover in Central London’s office investment market is expected to reach more than £16.8 billion, 20 per cent ahead of the long term average (£14.4 billion) and only 15 per cent down on 2015, one of the strongest years on record (£19.4 billion).
Overseas investors have been “particularly active”, says Savills, partly due to the currency shift following the EU referendum. Asian investors deployed £4.5 billion into the Central London real estate market up to the end of November, accounting for one third of total turnover for 2016 – the greatest market share on record.
Rasheed Hassan, head of cross-border investment at Savills, comments: “The weakness of Sterling following the EU referendum has encouraged a flow of international money into London with an effective discount of 10-15 per cent on entry prices for investors whose currency is pegged to the US dollar. Pricing overall has been easing off its high water mark since June 2015 and with these factors combined we have never seen such a level of interest in London from Asian investors, particularly those from Hong Kong, as we do today.”
In the City market, overseas investors have accounted for a noteworthy 85 per cent of activity since the EU referendum, with 54 per cent carried out by Asian purchasers. Notable transactions include new entrant Asian Growth Properties acquiring 20 Moorgate for £155 million, and Kingboard Chemical Holdings who purchased Moor Place, 1 Fore Street, for £271 million.
Stephen Down, head of Central London investment at Savills, adds: “Central London’s office investment market has been on the world stage more than ever in the second half of 2016 and total turnover reflects the ongoing appetite for, what continues to be regarded as, a global gateway city. We remain realistic of course but with prime yields ranging between 3-6 per cent, commercial property continues to be an attractive asset class for investors.”Google+