Why is the UK the most popular location for commercial property?

UK: global leaders

It’s official. The UK is currently the most popular location globally for commercial real estate investment.
Research from BrickVest, a global real estate investment platform, revealed Britain has become the commercial property hotspot among investors. As a joint eternity England, Scotland, Wales and Northern Ireland are the powerful countries across the globe that packs a punch for the UK.

Britain’s popularity increased from 27% in the third quarter of 2017 to 29% in the fourth quarter. Hot on the UK’s heels is the United States of America and France, both countries also gained popularity among investors. Previously, Germany held the top spot.

The report showed there was real interest in secondary cities as target markets, big cities across the country including those in the North West and others including Birmingham, Newcastle and Bristol.
Another piece research from Shawbrook Bank’s annual broker barometer shows a positive outlook for commercial property finance in the UK, with 78% confident about the lending environment in this sector despite the predicted gloom of Brexit. All very positive, but what are the downsides, if any? For 2018, the top three challenges commercial mortgage brokers part of the research done predict, that their businesses will face lending restrictions. This was mentioned by 26% of businesses, with 25% stating regulatory change and others were concerned about valuation issues. Regardless of these issues, which are areas of unease, there is still much to be positive about for the year ahead.

Residential property

The housing market in the North West has outperformed the wider UK in the period since the EU Referendum according to corporate property management company JLL. Over the next five years, the company expects average house price growth of 3.1% pa in the North West, above the average expected for the UK of 2.4 pa%.

And it’s Manchester that’s considered to be as the most attractive city in the residential investment market. The city’s price growth over the next five years is an expected average of 4.2%. Liverpool is another city in the North West that’s predicted to see a rise over the next five years with the average price growth of 3.6% pa. You can find out more information and view properties in the North West here at RWinvest.

Commercial property

Investment in UK commercial property rose 66% in January this year to £4.2 billion, compared to the same month last year, according to data from global real estate company Savills. Figures like this are a testament to the strength of the UK commercial property market, and a good indicator of the possibilities for the year ahead.

Savills says office and industrial sectors lead the way. Big hitters from overseas are the investors responsible for nearly half of this sector, of which Asian investors account for a fifth of all investment. Investors put nearly £11 billion into the industrial sector during 2017, which was 80% up on 2016.

The UK accounts for a significant proportion of the European corporate investment, this includes venture capital, private equity, mergers and acquisitions. It takes around 30 percent, on average, of all European deals by value. This is why investors continue to be attracted to the office and industrial market in the UK. And with the pressures on land, particularly inside major cities from other uses, this is another reason the sector is likely to continue to deliver on rental growth.

High yields

International real estate company, Savills, produced further research which helps any overseas investor understand why the UK residential property market is ‘the’ location for residential property regarding yields.

The average UK prime yields remained static in January at 4.52 percent, around 30 basis points lower than the same point in 2017. Currently, Manchester is cited as the best place for buy-to-let investment in England and Wales. It ranked highest for rental yields (5.55 percent) and rental price growth (5.76 percent). Manchester also took the top spot LendInvest’s rankings throughout 2017 and is top of the predicted 2018 best buy-to-let areas.

According to LendInvest research, the 10 best buy-to-let areas for 2018 are:
1. Manchester
2. Colchester
3. Luton
4. Rochester
5. Southend-on-sea
6. Hull
7. Romford
8. Norwich
9. Leicester
10. Ipswich

The value of property across the UK is second to none and seen as a global leader as the research shows. Whether it’s plush, high-quality properties in the best postcodes in London, stunning properties in the North West and the rest of the UK, the value of residential property in Britain is first-rate.

Property website Zoopla, produced a chart that combines the value of all residential property in Britain’s top 10 largest cities. The top 10 cities by total property value are below.

Commercial or residential property in Britain scores highly in each market, which shows it’s startlingly clear that the UK is seen as a centre to invest for those with an appetite to raise the bar and create a truly global portfolio.

For information on property investment opportunities contact RWinvest on +44 (0)151 808 1250 Email: info@rw-invest.com or visit our website.

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