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Investor demand set to be unleashed in second half of 2016

The UK commercial property market could see an exceptionally high amount of activity in the second half of 2016 as investors flood to the market post the EU referendum, says Savills.

The rebound in UK investment volumes in H2 could follow the pattern seen in the Scottish investment market after the independence referendum, when investment volumes in H2 2014 increased by 85%, compared to a normal second half of year increase of 45%.

Total investment volumes for all property in January and February 2016 were 10% higher than the long term average, although 25% lower than the equivalent period in 2015, according to Savills. Sentiment towards UK real estate assets is still overwhelmingly positive with the Lloyds Bank Investor Sentiment Index February 2016 demonstrating that 49% of investors were positive to UK real estate and fund managers increasing their allocations to UK real estate.

There are opportunities in the market for investors who are looking to strike in the immediate future. “The strong occupational markets and ability to buy good quality properties with longer leases than are prevalent in other global markets are attracting a wide range of non institutional UK and overseas investors”, says Richard Merryweather, Joint Head of UK Investment.

Mark Ridley, CEO Savills UK & Europe, continues:
“While some investors are exercising caution before the outcome of the Brexit vote is known, the combination of high allocations to UK real estate, strong sentiment amongst investors, record levels of occupier demand, falling supply and rental growth could all combine to see investors return to the UK market with a bang post referendum. Typically, even in non-election years, the second six months of the year are busier for investors than the first, but even taking this into account we’re expecting to see a very significant uplift in activity on account of the UK’s safe and stable market.”

View Savills March Commercial Market in Minutes report here

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BDC 318 : Jul 2024