November 8, 2017
Germany overtakes the UK as preferred place to invest in commercial real estate
One in three commercial real estate investors say Germany is their preferred region to invest in, the first time that Germany has been chosen as the number one region for investment ahead of the UK in the annual BrickVest commercial property investment barometer (‘the Barometer’) Germany was selected by 33 percent compared to the 27 percent who choose the UK, which saw a drop from 33 percent to 31 percent in the last quarter and from 32 percent in the same Barometer 12 months ago. Nearly one in five (17 percent) selected the US, which represents a slight increase from 12 months ago (16 percent), while France was selected by 15 percent, the same as Q3 last year.
Businesses are concerned about the pace of commitment to improving the UK’s infrastructure, and a record number of firms are dissatisfied with the state of infrastructure in their region. With the UK currently ranking 27th in the world for the quality of its infrastructure, nearly all (96 percent) of businesses in the 2017 CBI/AECOM Infrastructure Survey see infrastructure as important (of which 55 percent view it as critical) to the Government’s agenda. From the Clean Growth Strategy and the £500 billion infrastructure pipeline to its decision to build a new runway at Heathrow and press ahead with the A303 tunnel, the Government has made clear its commitment to British infrastructure. However, only one in five firms is satisfied with the pace of delivery (20 percent) and almost three quarters (74 percent) doubt infrastructure will improve over this Parliament. This lack of confidence is attributed primarily to policy inconsistency (+94 percent of firms) & political risk (+86 percent). The digital sector is the exception, however, where 59 percent of firms are confident of improvements.
Cyber risk is becoming increasingly common while the types of breaches are becoming more diverse, claims a new white paper by the audit and accounting expert BDO. For instance, ransomware is now the fifth most common type of malware; with the cost of freeing up computer systems from ransomware tripling since 2016. Yet organisations are continuing to spend up to four times more on insuring other company assets (e.g. property, equipment etc.) than on cyber insurance, despite an increasingly widespread belief that their cyber assets are in fact up to 14 percent more valuable. The report also finds that as cyber incidents increase, they become more difficult – and therefore more expensive – to defend. In the new cyber insurance white paper, BDO’s global cybersecurity leadership group stresses the importance of businesses gaining an understanding of their unique risk profiles in order to ensure the right cyber insurance for their needs. Cyber insurance: managing the risk does include some of the positive trends around cyber security – for example, both the level of Board involvement and investments in cybersecurity have increased significantly in the last 2-3 years.
The creative industries sector accounted for over a third 35 percent) of take-up in the regional office market in the first half of the year, with this sector in particular driving the co-working revolution and the provision of flexible office space. Latest figures in CBRE’s H1 2017 Property Perspective, which monitors the performance of ten regional cities, overall, the UK’s regional office markets saw continued demand in the first half of 2017, with office take-up reaching 2.8 million sq ft, only slightly lower than the five-year average. For the first half of 2017, several cities witnessed improved levels of take-up when compared with the first half of 2016, these include Aberdeen, Edinburgh, Leeds and Manchester. Select locations such as Reading, Maidenhead and Watford also saw a continuation of record rents being set during the first half of the year, which has largely been driven by the delivery of new developments.
Commercial property occupiers remain cautious about the future, and hard data indicates that demand has, so far, been largely unaffected by Brexit, claims a new report from the British Council for Offices (BCO) . ‘Brexit and its Potential Impact on Office Demand’, examines how Brexit might impact on demand for office space on a national and regional basis through to 2022. According to the report, almost one year on from the Brexit vote the situation is one of uncertainty, feeding through to slower growth, with ‘an almost palpable sense that choppy waters lie ahead, particularly with regard to trade and movement of labour’. However, businesses continue to make long-term investments in the national economy and even in the City, some large investment banks have committed to large new office buildings. There is much variation in the relative performance of the UK’s major office centres, though, with some expanding and others apparently in decline.
