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Research - 05/05/2016

Uncertainty weighs on London

The latest edition of our quarterly UK Investment Transcations report assesses the impact of the forthcoming EU membership Referendum on investment into commercial real estate during the first three months of 2016.

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The report reveals that:

  • At £11.9bn, Q1 volume appeared robust given the level of speculation and uncertainty around June’s Referendum on the UK’s membership of the EU. While investment was down 26% on the previous quarter it was closely in line with the five-year quarterly average.
  • However, 50% of Q1’s volume was in January, indicating that market sentiment changed during the quarter in preparation for the Referendum. This was most evident among institutions, where 70% of their Q1 activity took place in January.
  • Pricing held firm during Q1 despite increasing caution. The average all Property transaction yield moved in by 13 basis points to 5.49% during Q1, while prime yields remained broadly steady.
  • Central London offices bore the brunt, with Q1 volume of £2.2bn substantially down on Q4 2015’s £4.6bn and the lowest since Q4 2011. Meanwhile, UK industrial volume increased quarter-on-quarter and stood 24% above the quarterly average.
  • Overseas buyers largely accounted for the fall, with volume halving quarter-on-quarter to £4.7bn, its lowest since Q3 2013. In contrast, activity from private and listed companies rose quarter-on-quarter and was ahead of average.
  • Activity in the UK regions held up well, with volume outside London reaching £4.5bn in Q1, up 16% on the five-year average. While overseas investment fell sharply in London, it was 65% above the quarterly average across the rest of the UK.
To download the report click here

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