The share of overseas investors in the UK commercial property market reached its highest ever level in 2020, accounting for 50% of the £44 bn (€50 bn) total for the year, according to Colliers International.
December saw investment into the UK commercial property market reach £6.7 bn, more than 80% above the 2020 monthly average. The industrial and office sectors accounted for more than £2 bn of investment each in December, driven by several high-profile office deals in London and three large industrial schemes.
‘The continued interest from overseas investors in 2020 is testament to the value that is still to be found in UK commercial property,’ said John Knowles, head of National Capital Markets at Colliers International. ‘Despite all the negative headlines around the future of the office, December’s investment volumes into the sector show that there is still capital ready to invest in well located, core stock. It will come as no surprise that industrial had a particularly strong December as appetite remains unabated, and I expect that the sector will still be the most in demand well into 2021.’
The £2.3 bn invested in offices in December drove the annual total for 2020 to reach £13 bn in the sector, 27% below the 2019 figure. Last year, overseas capital accounted for 62% of investment into offices, up from a 58% share in 2019. The largest December deal was Sun Venture’s purchase of 1&2 New Ludgate for £552 mln at a 4% yield. The next largest deal by value was Allianz Real Estate’s purchase of the Marylebone Portfolio for £401 mln at a 4.32% initial yield.
Industrial investment reached £2.9 bn in December, as monthly investment volumes broke through the £2 bn mark for only the second time on record. The 2020 annual figure of £9.3 bn means that the sector’s share of all CRE investment rose to 21%, up from 14% in 2019 and the highest on record. December’s largest deals include Blackstone Real Estate’s acquisition of the EPIC industrial portfolio for £335 mln, AIMCo’s purchase of the Marlin Portfolio for £260 mln, and the sale of the Metro Portfolio to InfraRed Capital Partners for £50.75 mln.
Oliver Kolodseike, deputy UK Chief Economist at Colliers International, added: ‘Last year’s market was characterised by uncertainty, lockdowns and government stimulus and this is unlikely to change in the first quarter of 2021. However, businesses have generally adapted well to lockdown measures and the roll-out of different vaccines and ongoing government support (such as the extension of the furlough scheme and new business grants) will help the economy to rebound strongly in Q2 21.’
