It is set to be yet another year of high returns for investors in the UK’s commercial property sector, with potential investment volumes to match the record-breaking year of 2015.
The sector is tipped to have a total investment of £70 billion, with predictions of attractive total returns of around 10.1% remaining positive all the way through until 2020.
Foreign investment is likely to play a larger role in the commercial property market, including increases outside of central London in that avenue. This leads to more foreign buyers and sellers and therefore a noticeable increase in diversity amongst investors.
Origins of foreign capital is also likely to experience change, with Asian investment inflows being higher than the ten year average and up and coming countries such as Singapore and Taiwan becoming more important, and arguably game changers in the industry.
More often than not, Middle East investment is coming from private wealth as opposed to sovereign wealth, which could be due to the low oil price that area is suffering from in recent months.
The UK economy remains strong, and the rental value growth is becoming increasingly important. Strong investor confidence is set to propel the market into record-breaking figures in 2016, with deal volumes at the third quarter of last year already surpassing £50 billion.
If things continue and predictions are correct, the commercial property market is likely to hit the £70 billion mark for the first time in history.
Strong rental growth projects in Birmingham and Manchester attract a decent share of investment outside of central London in the UK, with Scotland and the South East areas also proving to be the most popular locations.
Investors tend to be opportunistic in the UK, attracted to regions as opposed to capitals, by considering the higher yields and growth prospects as well as the hope to add value for the future. This is a key trend that is likely to continue in 2016 as non-domestic investors have become increasingly familiar and comfortable with expanding their markets outside of central London.
Taking all these positive factors into account, now is as good of a time as any to invest in commercial property, with the increased interest from international investors, the market is likely to flourish in the upcoming economic conditions.
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