UK £65 Billion Real Estate Investment Volumes in 2014 a New Record

Investment in real estate across the UK in 2014 hit a new record at £65 billion. It is a 3 percent increase of the 2006 pre-recession high and about 16 percent higher than the £55 billion recorded in 2013 as per figures released early February by JLL.

 

Robust commercial property market

The United Kingdom has a very robust commercial property market and the second largest globally accounting for about 18 percent of all worldwide transactions. The JLL report indicated that the main driver of investment volumes growth was the flow of capital into many regions in the United Kingdom that reached £28 billion and a 70 percent rise from 2013’s, currently the highest increase ever recorded.

The West Midlands, Scotland and the South East stood apart as the top three regions across the UK for investment in property. West Midlands had a volume of £2.7 billion, Scotland’s stood at £3.2 billion and South East had an investment volume of £5.7 billion. The figures represent South East’s 29 percent increase in volume from the recorded 2013 volumes, 67 percent for West Midlands and 82 percent for Scotland.

 

London tops

In 2014 alone, London stood as the leading international destination in 2014 for matters relating to direct investment in real estate with a record transaction of £27.5 billion. About £17.5 billion of the £27.5 billion was mostly from overseas showing that apart from the volumes dipping by 2 percent from those recorded in 2013 London remains the top world destination for investment in real estate.

 

US dominates overseas investment

 

US tops UK

US tops UK

Of all the transactions, domestic investors’ transactions stood at 53 percent, which is a 3 percent drop of the totals recorded in 2013. The overseas investment in London was dominated mostly by capital from the United States and accounted for 11 percent of the total investment volumes followed by 4 percent Chinese capital.

 

 

Dominants of the asset class

Of the dominant asset class in terms of property the office sector was at the top with an investment volume of £29 billion, an increase of 13 percent from the investment volume recorded in 2013. The retail sector followed closely at exactly 13 billion, essentially a 19 percent yearly increase with the industrial sector showing a 30 percent increase to record £7 billion.

 

Dramatic significant change

However, the most significant dramatic change was in the area of alternative assets such as hotels, student housing and healthcare, which accounted for 19 percent of all transactions by the end of 2014 from about 3 percent only in 2009.

The 2014 real estate activity has bolstered the United Kingdom as arguably the best direct investment in real estate market globally, driven both by overseas investors and domestic investors. Domestic investors seem to be attracted largely by high returns offered by property investment while investors from overseas seem to be drawn by the transparency and liquidity of the property market in the UK.

 

Expect a robust 2015

Due to the existing low interest rate and a rising volatility in many other classes of assets, it is wise to expect another busy and robust year in commercial property market in the UK. There is a lot of confidence on the UK economy by both domestic and overseas investors in the commercial property market not only in the English capital but also other regions in the region.

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