Research - 31/10/2016

Sterling devaluation drives overseas property investment despite market uncertainty

Investment into UK commercial property fell to £9.7 billion in the third quarter of 2016, down by 24% on the same period last year, according to new research by property consultancy Lambert Smith Hampton.

Find out more

However, the latest edition of the company’s quarterly UK Investment Transactions report also reveals that September 2016 was the third busiest September on record, as overseas buyers took advantage of the devaluation of Sterling post referendum.

The majority of property asset classes recorded volumes below their five-year quarterly averages during the third quarter of the year, with retail and specialist the only exceptions. Offices bore the brunt, however, with Q3 investment falling 44% short of the five-year quarterly average, with Central London offices experiencing its lowest transaction volume in five years as Brexit fears dampened investor appetite. 

The research shows that local authorities have rapidly emerged as major buyers of commercial property. Local authorities purchased £750 million worth of assets in Q3, by far the largest volume on record from public sector bodies, smashing the previous high of £260 million.

Yields continue to increase post the EU Referendum.  Following a 15 bps rise in the second quarter, the All Property transaction yield increased by a further 6 bps in Q3 2016 to stand at 5.70%.  This was driven by Central London offices, which rose by 64 bps in the quarter to stand at 4.44%. Industrial was the only core sector to see yields decline, standing at 5.54%, which is its lowest on record. 

To download the latest edition, click here.

Get in touch


Get the latest insight, event invites and commercial properties by email