The capital values of prime commercial property in the UK have stabilised, according to global real estate services advisor Savills. This comes as a relief as the growth in capital values had taken a hit following the UK’s exit from the European Union.
Savills says that competition for the best assets remains strong with demand often exceeding supply, hence, it is resulting in capital value growth. In addition, commercial property in the UK is considered as a safe asset by investors, who have enjoyed good ROI over the years. The growth in capital values of prime commercial property is likely to continue into 2017, as demand for quality property outstrips supply.
International investors are evincing interest in the UK commercial property, and they accounted for 47 per cent of the investments during the last four months of 2016. This can be attributed to the weaker Pound, which is prompting investors to acquire commercial properties in the UK for long-term gains. The Sterling continues to remain 16% below the pre-referendum level in US$ terms and this will continue to attract international investors to the UK, particularly London.
Savills has observed that these factors, in addition to the strong fundamentals of the UK real estate market, will continue to drive the growth of the commercial property in the UK.
Mark Ridley, CEO of Savills UK and Europe, says: "Overall, despite the global political events of the past eight months, with more European elections to come, the attractiveness of UK commercial property as a fundamentally safe asset class to all types of buyers continues."