Investment demand in UK commercial property continues to rebound post-EU vote : RICS

LONDON, UK - JANUARY 27, 2015: City of London, business and banking aria. London's panorama in sun set. View from the St. Paul cathedral

The rebound in investment demand continues post-EU referendum, according to the Q4 RICS UK Commercial Market Survey 2016.

Despite some concern surrounding potential relocation of companies based in the UK, demand from overseas buyers was up notably across all areas of the market in Q4 2016. Demand increased for a second straight quarter with the growth in enquiries gaining momentum, as 21% more respondents saw a rise in demand in Q4 up from 9% more in Q3.

Foreign investment also saw a rebound, with the weaker exchange rate likely an important factor. 20% more respondents saw a rise in demand in foreign investment enquiries up from 7% more seeing a rise in Q3 (this reading has recovered significantly from -27% in Q2 2016).

At the same time, the supply of property for investment purposes fell in both the office and industrial sectors, but was broadly unchanged in the retail segment.

Investment trends in the capital remain mixed. Industrial assets attracted a solid rise in investor interest during Q4 but overall enquiries were flat in the office sector and declined modestly in the retail segment. That said, foreign investment demand did in fact grow strongly across each sector of the capital, with the sharp decline in sterling since June particularly prominent in enticing overseas demand. Nevertheless, having stabilised during Q3, all-sector capital value expectations slipped back into negative territory in London.

“The results for the Q4 survey suggest that the commercial property market is continuing to attract investor interest despite ongoing concerns about pricing in the capital and the prospects for the economy more generally. Indeed, the feedback we have received is consistent with a renewed appetite from overseas buyers for UK assets.”

“Meanwhile the results for the occupier market highlight the resilience of the economy in the wake of the vote to leave the EU, but also clearly demonstrate the demand for large warehouses to support the development of the distribution industry as consumers increasing go online to make their purchases.” said Simon Rubinsohn, RICS Chief Economist.

Source : RICS

 

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