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UK becomes popular global location for commercial property investment


A pro-European Union,(EU), anti-Brexit demonstrator holds the EU and UK flags outside the Houses of Parliament, in central London on January 22, 2018. / AFP PHOTO / Daniel LEAL-OLIVAS

The United Kingdom is now the most popular location globally for commercial real estate investment with Germany losing favour as a commercial property hotspot, the latest research suggests.

Britain’s popularity among investors increased from 27per cent in the third quarter of 2017 to 29per cent in the fourth quarter and the United States and France have also gained popularity among investors.Indeed, Germany has gone from the top spot to fourth place behind the UK, the US and France, according to the latest commercial property investment barometer from BrickVest.

Germany saw a drop in popularity from 34per cent to 23per cent in the last quarter of 2017, marking its lowest rating since the second quarter of 2016. The UK, however, rose from 27per cent to 29per cent, managing to sustain its favourability by consistently ranking above 25per cent.

Both the US and France have also gained popularity with investors, with nearly 19per cent preferring the US over other regions and 18per cent now selecting France as their location of choice, up 4% since the second quarter of 2016.

The Barometer also revealed that the hunt for income ranked highest at 38per cent as the primary investment objective of BrickVest investors this past quarter. This has risen by 6per cent from 32per cent in the third quarter of 2017.

The report says it is notable that interest in secondary cities as target markets continues to steadily increase from 37per cent in the third quarter of last year to 41per cent by the end of 2017. These include cities such as Birmingham, Newcastle and Bristol.

“Our latest barometer reveals that Germany is no longer the favoured destination for commercial real estate investment, contrary to its position in the third quarter of 2017. Rather, the UK has once again become the most popular region for our investors,” said Emmanuel Lumineau, BrickVest chief executive officer.

“There have been similar changes in other aspects of the data, including the greater emphasis placed on the hunt for income and the growing popularity of secondary cities as target markets,” he pointed out.“As the year progresses and we continue to conduct our barometer, it will be interesting to see how the industry adapts to these underlying factors affecting the real estate market,” he added.

Meanwhile, the annual broker barometer from Shawbrook Bank, reveals a positive outlook for commercial property finance in the UK with 78per cent confident about the lending environment in this sector despite Brexit.

This is up from 72per cnet in 2017 and the research also shows that 69per cent of brokers are confident about business growth in 2018 after 27per cent saw a 30per cent plus increase in business in the second half of last year.The top three challenges that the commercial mortgage brokers surveyed expect their businesses to face in 2018 are lending restrictions, cited by 26per cent, while 25per cent said regulatory change and 16per cent valuation issues.

‘Despite some of the uncertainties surrounding the PRA changes and the possible impact of Brexit, it is encouraging to see so much positivity in the commercial mortgage broker market when looking at the year ahead,’ said Karen Bennett, the bank’s managing director for commercial mortgages.‘It’s also fantastic to see so many brokers reporting such encouraging results in business volumes, demonstrating the robustness of the commercial mortgage market,’ she added.

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