Commercial property popular among domestic investors

UK-based investors have pumped some £18.8 billion into Britain’s commercial property market over the last 12 months, new research from Savills reveals.

According to the estate agent’s report, domestic investors accounted for more than half (59 per cent) of all transactions in the year to July 2018.

This is up 12.9 per cent when compared with figures from the 12 months to July 2017, Savills noted.

However, the group’s research reveals that while domestic investment appears to be on the rise, overseas investment in UK commercial property has fallen significantly year-on-year.

Specifically, non-domestic investment has dropped by almost a quarter (21 per cent), settling at £12.8 billion.

Mat Oakley, Head of Savills’ commercial research department, suggested that foreign investors were predominantly purchasing “prime stock,” such as commercial units in Central London, and straying away from other investments.

According to separate data from agent Knight Frank, overseas investors have spent £7 billion on London commercial property in the first half (H1) of 2018, with buyers based in Hong Kong accounting for the majority of investment.

Mr Oakley said that nationally speaking, the overall outlook for the market looked promising for the remainder of the year.

“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.”