The EU referendum cast a shadow of uncertainty over the UK’s commercial property market last year, Investor confidence decreased resulting in a number of property funds being temporarily suspended amid an outflow of funding. Almost 18 months on, things are starting to look up for the commercial market.
The increased investment in the UK commercial market for the first half of 2017 was believed to be £27.2bn, a 1% increase than the same period in 2016. In the same period, commercial property in the city of London reached £4.98bn, which saw a 17% increase from 2016. There was a clear decline in activity directly after the EU referendum, and there was a 25bps outward movement in yield across most of the main sectors, which equated to around a 5% fall in values.
It was seen that the open-ended real estate funds were hit significantly and saw outflows of investor funds causing individuals to sell assets to meet redemptions. However, by the end of the third quarter, most of the fund redemptions had slowed and the values in the market were increasingly stabilising again as investment activity picked up (helped by the decline in the value of sterling)
2017 has been a much stronger year, the scale in investment seen in the first half of 2017 was indeed beaten only by the record in 2007 and 2015, and 2017 looks on track to beat last year in terms of the overall investment volume. Smaller investors in the sub-institutional market appear to have been unperturbed according to the sales and success rates in the auction rooms.
Despite the EU referendum and the mixed opinions of uncertainty, it is clear that the appetite in commercial investment has seen a great recovery and investment volumes have increased. Here at Key Commercial Finance Solutions Ltd we have over 300+ years of combined expertise in the above sector so please call the team today and we would be more than happy to assist you if you require funding for commercial finance.