Nery Alaev writes about a drop in investment for UK commercial property.
The ‘gold rush’ of investors buying commercial property in the United Kingdom may be coming to an end, according to a new set of data.
Several reasons, including external factors such as oil price falls and turbulence in China, have been pointed to as potential reasons for declining appetites in UK property, which is growing increasingly expensive – especially in the capital London.
I’ve decided to look further into the news and conclude on the data.
The decline in investment has been steep – 19% down in the second half of 2015 when compared to the same period in 2014. Overall, £32.7bn was invested in the UK during the six months to the end of December – less than the £40bn invested in the same period during 2014.
The change has been reflected by several deals that have fallen through and/or failed to materialise. For example, the sale of Heron Tower to a Chinese insurance giant fell through in September and Devonshire Square was taken off of the market alongside other high-value properties.
Richard Yorke of CoStar, who released the data, said that tumbling oil prices affecting the Middle East (and subsequently, its investors) as well as economic struggles in China as well as a potential British exit from the European Union were all factors at play in the drop.
The UK’s vote on the EU seems to be a major issue for investors.
Chairman of the Canary Wharf Group, Sir George Iacobescu, said:
“The hiatus that you see today is in part because of Brexit. People are thinking twice”
This ‘hiatus’ has been put down to currency fluctuations that may follow the vote, which may be in June.
Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.