Overseas Investment in UK Commercial Real Estate Grows as Market Value Dips to £949 Billion
The UK market now holds a value of £949 billion. Overseas investors are more active here. The Investment Property Forum shows UK property dropped from £1.114 trillion in 2020 to £949 billion at the end of 2023. Bond yields rise. Rents grow. The industrial group gained ground even as the total stock fell. Since 2000, property grew by 89% while price increases measured by the Consumer Price Index reached 73%. In this setup, retail now sits at £275 billion, offices at £221 billion, industrial at £366 billion, and remaining types at £88 billion.
The Decline in Commercial Property Value
The report "The Size & Structure of the UK Property Market" lays out that the numeric value fell. Early gains in 2021 could not hold because bond yields and interest rates climbed. The industrial area stayed strong amid these changes.
Overseas Ownership on the Rise
The report shows that foreign control went from 14% in 2003 to 40% today. Many funds, trusts, state funds, and private firms invest. While London offices once got much focus, recent years see money spread over residential, industrial, and student housing too.
UK Institutions Losing Ground
UK groups, like insurance companies, held 20% of the market in 2003 and now hold only 6%. Still, these groups lend large sums, with financial exposure around £140 billion. Pension funds also shifted their ways. They cut direct buys from £43 billion in 2020 to £32 billion now while pushing more into indirect channels.
Growth in Residential Investment
Investment into homes grows. Now, over £100 billion sits in the residential side. The build-to-rent part holds more than 100,000 units. Investment grows in student housing and other home projects. This part now makes up about 16% of the combined stock.
Conclusion
The IPF report marks a time of change in the UK property market. While the overall value dips to £949 billion, foreign investors now shape the market. As local groups hold less direct stock, international money influences which types of property get built and bought. This change brings both gains and risks, especially for those checking houses in multiple occupation (HMOs).
References:
- Investment Property Forum (IPF), “The Size & Structure of the UK Property Market” Report, 2023
- CoStar Group, “UK Commercial Property Ownership Trends,” 2023
- Office for National Statistics, "UK Property Ownership Patterns," 2023
- Financial Conduct Authority, “Investment Performance Review,” 2023
