Overseas Owners Increase Share as UK’s Commercial Real Estate Slips to £949 Billion Value
The latest report from the Investment Property Forum (IPF) shows a shift in the UK’s commercial real estate market. Overseas owners grow as domestic firms shrink. The UK property market is now valued at £9.3 trillion by 2023. Commercial real estate sits at £949 billion. Economic factors over the last three years push this change.
Commercial Real Estate Valuation Trends
The IPF report, "The Size & Structure of the UK Property Market," uses data from trusted sources since 2005. The value of commercial property fell from £1.114 trillion in 2020 to £949 billion now. In 2021, yields dropped and rents grew, which pushed values up. Later, rising bond yields and interest rates led to the decline.
Key Valuations by Sector:
- Retail: £275 billion
- Offices: £221 billion
- Industrial: £366 billion
- Other Commercial:* £88 billion (including hotels and leisure)
The total for commercial property now stands at £949 billion. Residential properties account for £8.274 trillion. Together, they reach £9.243 trillion.
Long-term reviews show industrial and logistics properties grow 157% since 2000. The retail sector grows only 14% over the same period. When adjusted for inflation, retail values lose strength.
Rising Influence of Overseas Investors
Overseas investors now hold more share in UK commercial real estate. Their share grew from 14% in 2003 to 40% by 2023. They include private equity funds, sovereign wealth funds, and international real estate investment trusts (REITs).
In the 2010s, many invested in London office spaces, which made up 59% of net purchases. Recent trends show a shift. Investors now buy in several sectors and spread their interest to residential properties such as student housing as well as industrial assets.
Declining UK Ownership
UK firms now own much less of the commercial real estate market. In 2003, they held a 20% share. By 2023, their share dropped to 6%. UK pension funds still play a role. They put more than £100 billion into real estate through indirect channels.
Institutional Investment in Residential Sector
Commercial property faces headwinds while funds invest more in housing. Residential investments have reached over £100 billion. This makes up around 16% of the entire market. The IPF notes more than 100,000 build-to-rent units. Student housing also attracts steady interest.
Conclusion
The UK’s commercial real estate scene changes fast. Overseas investors gain as domestic owners drop. This trend brings risks and options for those who invest. Market shifts matter for firms, especially in the House in Multiple Occupation (HMO) sector. Understanding these trends helps investors act with care.
For more details, read the IPF report. See also data from the Office for National Statistics and research from CoStar Group.
Sources:
- Investment Property Forum: The Size & Structure of the UK Property Market
- CoStar Group: UK Commercial Real Estate Markets
- Office for National Statistics: UK Economic Data
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.
