UK commercial property investment set to reach record high

Property has once again shown its value towards the country’s economy as it was revealed that UK commercial property investment is set to reach a new record high, reports development specialist Richard Carr.

£70 billion forecasted

Richard Carr Commercial Property

Commercial Property Investment set to rise

Research produced by Propertydata indicates that investment volumes are set to be the highest ever on record this year.

During the first three quarters of 2015 almost £50 billion of transactions were completed and with a healthy pipeline of deals, the final quarter volumes are expected to exceed £20 billion.

The volumes for the first nine months of this year show a 17% increase against the same period last year with much of this capital coming from overseas investors.

International investment

2015 has seen a 45% increase in international investment based on 2014 and by the year end overseas investors are expected to account for over 50% of the UK market for the first time ever. This compares with just a 25% share some 15 years ago.

“There is still plenty of capital chasing commercial property, with this year set to be record breaking. However, with the market edging towards its natural peak in the cycle, a pause for breath seems likely in 2016,” said Darren Yates, head of research at Carter Jonas.

“Moreover, investors will need to factor in headwinds such as the anticipated interest rate rise and the EU referendum may start to play on investors’ minds.”

Growth in hotels

The majority of growth in the area has been down to a sharp increase in deals involving hotels, leisure and specialist property assets, whereas investment deals in offices and retail warehousing rose by just 1% over the same period.

Investors are also taking advantage of smaller established cities after finding good value investment opportunities tough to come by in central London and large regional cities.

Areas such as Oxford, Cambridge and Bath have experienced increases in volumes, however as supply is restricted in these locations it could add downward pressure on yields.

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