The global real estate adviser forecasts that UK commercial property investment volumes in 2016 will remain the same as in 2015, which was a record year for investment.
Ciaran Bird, UK managing director, CBRE UK, said: “Property will continue to be a bellwether for the UK economy and 2016 is set to be another year of strong returns for investors.”
With total returns of 10.1% expected next year, CBRE predicts the total investment in UK commercial property to be around £70bn.
Total returns are likely to decline from there, but should remain positive through to 2020, CBRE said
The industrial property market will outperform with total returns of 9.5% pa on average for each of the next five years, due to a strong economy and an increasing role in e-commerce, according to CBRE.
Foreign investment rose further in 2012-13 but has levelled out at around 70% of all central London investment in 2014-15. Foreign investment outside London has also increased in recent years. In 2015 32% of transactions -by value- outside London have attracted foreign buyers from 31 different countries – a noticeable increase in the diversity of investors.
Countries like Singapore and Taiwan are becoming more important in terms of foreign investment, while European and US investors have withdrawn somewhat over the last year. This is potentially due to a recovery in Europe promising relatively better value than the UK, according to CBRE. And Middle East investment is increasingly coming from private wealth rather than sovereign wealth, given the latter is suffering from the low oil price.
“Overseas investment will remain strong and increasingly diversified as London maintains its status as the global centre for property investment, said Miles Gibson, Head of UK Research, CBRE UK. “But we predict increasing interest in, and outperformance by, office and industrial property markets in the wider South East and other big UK cities, and a long-awaited recovery in retail.”
