Tuesday, September 29, 2020
Real Estate

UK commercial property investment dips in 2019

uk commercial property

2019 was a tough year for UK commercial property investment as transactions were down 10 per cent to £2 billion

The past year was a tough one for UK commercial property investment as it went with the overall UK property market slowdown, however, some of the big deals in the commercial property market propped up the sector. Among those, was the sale of the BrewDog Hop Hub which changed hands at a cost of £10 million.

According to an analysis from Knight Frank, the number of UK commercial property deals dropped in 2019 and the total transactions during the year was worth £2.074 billion – 10.38% below the five-year average. This has been partly due to the inactivity in the fourth quarter as investors waited for the outcome of the general election.

Edinburgh office sales were up 70.42% on the year before – from £284 million to £484 million, with major transactions including the Leonardo Innovation Hub at Crewe Toll and 4-8 St Andrew Square. Overseas investors drove investment with a 56% share of transactions on commercial property, while domestic investments came down with the share of UK institutions dropping to just 14%.

On the high street, transactions for shop units were 79.57% below the five-year average at £44 million (compared with £215.4 million), while shopping centres represented £38 million of investment in 2019 against an average of £197.6 million (down 80.77%).

In industrial premises, Knight Frank acted for CBRE Global Investors as it bought the BrewDog refrigerated warehouse at Eurocentral near Motherwell. Knight Frank said it knew of a number of buildings being lined up for a sale and expected a busier year.

Head of Scotland commercial at Knight Frank, Alasdair Steele, said that there were a lot of factors for investors to contend with in 2019 – Brexit negotiations, a change of Prime Minister, and a General Election to name but a few. That inevitably leads to a pause for thought, as with any significant macro-economic or political changes in the past. Against that backdrop, investment levels were robust last year and there were some significant bright spots, such as Edinburgh offices.

He said that there are already signs that 2020 could be a great year. Investors are coming back to the market now that there is some much-needed political stability. There has been interest coming in from a range of international sources, including some buyers who would be new to the Scottish market. Inevitably there will be some bumps in the road ahead as Brexit begins to take shape; but, for now, there is a real window of opportunity emerging and trading volumes should pick up in the first half of 2020, all things being equal.

Important:
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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