July 11, 2019
Commercial property investors losing appetite for UK
Enthusiasm among international investors for the UK commercial property market has continued to wane over the past quarter, according to BrickVest’s latest commercial property investment barometer. According to the data ,capturing the views of over 6000 international professional real estate investors, only 27 percent view the UK as their preferred market, a 4 percent fall in the past 12 months.
Appetite for the UK property market among German investors fell to 14 percent, down from 19 percent year-on-year while in France it slipped to 10 percent, almost half the portion (19 percent) from a year ago.
France is the biggest beneficiary of the UK’s decline with a 20 percent year-on-year increase in international investment sentiment while support for Germany rose by 7 percent.
Underlining increased concerns of an imminent turn in the cycle, the Barometer reveals a sharp fall in the projected volume of assets under management (AUM) investors are planning to deploy into real estate over the next 12 months. Overall, investors expect to commit just 2.5 percent of their total AUM, a 33 percent fall on their planned allocation of 3.7 percent in Q2 2018.
Increased caution is also seen in the increased appetite for lower risk strategies, which rose 4 percent during the second quarter to 27 percent while high risk sentiment fell over the same period by 3 percent to 22 percent.
Emmanuel Lumineau, CEO at BrickVest, commented: “The latest figures of our Barometer reveal the continued negative effect of Brexit uncertainty on the UK commercial property market among international investors and particularly those based in France and Germany. We can expect this to continue over the third quarter and the October deadline at the very least. In the meantime, France and Germany are becoming more attractive destinations for international real estate capital. However, we’re likely to see a sharp drop in capital allocations to real estate over the next 12 months as nervousness about the end-cycle conditions will see many investors taking a circumspect approach.”