UK Commercial Investment Experiences Dampened Q1 2016

Posted on 22 April, 2016 by Chris Grigorovsky

A possible Brexit continues to cause uncertainty as investment in UK commercial property saw a significant slowdown in the first quarter of 2016, according to new research from Lambert Smith Hampton.

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Its latest quarterly UK Investment Trends report has revealed a total of £11.7 billion of investment during Q1 2016, which is 27% down on Q4 2015 but 7% above the long term average. January accounted for half the total volume in this year’s first quarter.

It was found that UK-based institutional investors were the ones scaling back on activity, with the lowest quarterly total for nearly three years, purchasing £2.9 billion of commercial real estate in Q1 2016.

Regionally however, appetite remains strong as during the quarter, £4.5 billion was invested outside of London, which is 6% above the five-year average. While in the capital, investment was down 15% on the five-year average, which is due to the reduction in overseas buyers.

Elsewhere, Central London office investment was the lowest since the end of 2011, with £2.2bn recorded in the first three months of this year.

CEO of Lambert Smith Hampton, Ezra Nahome, said: “It’s no surprise that investors have taken a step back in the face of growing uncertainty over the outcome of June’s EU referendum.”

Comparisons were drawn from 2014 and the vote for Scottish Independence, with Nahome saying “We’re experiencing it again now – investors do not like uncertainty.”

Looking forward, he said: “The next couple of months are likely to remain quieter and I expect to see a reduction in investment volumes in the second quarter of the year. This creates opportunities for those who know where to look, and investors who can mitigate the uncertainty with strong insight are in a strong position to benefit.

“Brexit concerns aside, the market remains in a fundamentally strong position and we don’t see any reason why activity won’t bounce back if the country elects to remain part of the EU on 23 June.”




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