Overseas Ownership in UK Commercial Real Estate Grows Amid Market Decline
Overview of the UK Commercial Real Estate Landscape
The report from the Investment Property Forum (IPF) shows UK commercial real estate losing value. The market dropped to £949 billion at the end of 2023. It stood at £1.114 trillion in 2020. The study shows more foreign investors own parts of the market. The data comes from ongoing work that looks at the size and make-up of UK property.
Decline in Commercial Real Estate Value
The Cambridge Real Estate Centre compiles the report and updates it since 2005. The data marks clear changes. In 2021, yields fell while rents grew a bit. Soon after, higher bond yields and rising interest rates pulled down property values. Over the years 2020 to 2023, property values dropped even as two decades before saw an 89% gain. Inflation, measured by the consumer price index, rose by 81%. This work shows the market stayed close to flat in real terms.
Breakdown of Commercial Property Value
- Retail: Valued at £275 billion
- Offices: Valued at £221 billion
- Industrial: Valued at £366 billion
- Other Commercial: Valued at £88 billion
Retail sold a steady role in the market, yet it grew only 14% over 20 years. In contrast, the industrial and logistics areas grew by 157% in the same span.
Surge in Overseas Investment
The report shows a large rise in foreign ownership. In 2003, foreign hands held 14% of UK commercial real estate. By now, that number has reached 40%. Funds, trusts, and similar investment groups from abroad now hold more assets. From 2013 to 2020, many of these investments were in London offices; about 59% of net purchases went there. Recently, investors choose other regions and types of property, such as homes and factories.
Key Players and Their Influence
Foreign investors, including group funds, now hold about £31 billion of UK real estate. Key names include Norges Bank from Norway, Singapore’s GIC, and the Abu Dhabi Investment Authority. They buy basic offices and also turn to health sites and warehouses. Such moves keep UK real estate appealing on the world stage.
Domestic Investor Trends
Local investors now hold a smaller part of the market. Life insurance companies and pension funds owned 20% in 2003 and only 6% in 2023. They keep their roles as lenders but spend less on direct investments. Pension funds now prefer group investments. They have now put over £100 billion into UK property. Interest in city projects, like build-to-rent, shows that new fields are growing.
Conclusion
UK commercial real estate now shows a clear change. Foreign investors own more assets while local buyers own less. Even as total property value falls to £949 billion, the market still has space for smart moves. Investors in House in Multiple Occupation properties and other areas may find new paths to gain. In a shifting market, players must watch and adjust to new trends.
References
- CoStar News. "Overseas owners increase share as UK’s commercial real estate slips to £949 billion value." Mar. 28, 2025.
- Investment Property Forum Report. "The Size & Structure of the UK Property Market."
- Office for National Statistics and Financial Conduct Authority data.
For further insights into property investment trends, visit CoStar Group and the Investment Property Forum.
Disclaimer: This article has been generated by AI based on the latest news from Google News sources. While we strive for accuracy, we recommend verifying key details from official reports.
