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Domestic investors return to UK commercial property with 13% year on year growth

Domestic investors return to UK commercial property with 13% year on year growth

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Domestic investors have increased their activity in the UK commercial property sector with the group accounting for 59% of all acquisitions to July, an increase of 12.9% year on year, according to UKSPA members Savills.

In total, domestic investors have spent £18.8bn on UK commercial property this year as non-domestic investment fell by 21% year on year to reach £12.8bn. Increased domestic activity is attributed to a strong occupational market in both the offices and industrial sector with both sector’s prime yields tightening by 75bps over the last 12 months

The firm notes that there have only been 56 deals over £100 million in the first seven months of 2018, down from 70 in the same period last year. The rising probability of a hard Brexit may also be to blame for the reduction of activity from overseas sources.

Mat Oakley, director and head of Savills commercial research, adds: “The UK commercial property market is in a period of relative stability with prime yields remaining at 4.56%, the same level as at October 2017. There has been some movement in the retail sector with further upward pressure on yields expected in the coming months, however other sectors such as offices and industrial continue to perform well. The rest of the year should see continued appetite from domestic investors, with prime stock remaining the predominant focus of overseas capital.”

 

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