Commercial Finance

Commercial property investment fell off a cliff in 2016

Commercial property investment volumes fell by 35% to £46bn in 2016 – ending three consecutive years of growth.

That was according to property consultancy Knight Frank, which reported a slowdown in activity in the summer months after the UK voted to leave the European Union.

Nearly half (49%) of the UK’s commercial property investment came from overseas, with the Brexit vote making it cheaper for foreign investors due to the weaker pound.

With commercial property investment waning Knight Frank predicted an 18% increase ‘specialist property’ investment in 2017 – which it defined as investment in the private rental sector, healthcare, hotels, automotives and student property.

Knight Frank indicated that investors are focusing on longer-term assets to combat short-term economic uncertainties.

Shaun Roy, head of specialist property at Knight Frank, said: “The growing appetite for long-term secure investments with good covenants amid the current uncertainty has intensified, which is driving the demand for specialist property.

“Investors now regard the granularity of the income derived within the specialist sectors as a positive rather than a threat, and a facet that improves its durability of income.

“The outlook for the coming year is positive and increased liquidity should draw particular attention to specialist assets.”

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