A report by Savills shows UK commercial property sector in general good health but warns six sectors including retail warehouses and regional offices could feel pressure on yields. Louis Bearn reports.

International property firm Savills reports that UK commercial property investment grew 1% over the first half of 2017, despite the uncertainty following the unexpected General Election result. Average prime yields remained at 4.7% in June in response to continued uncertainty.

Savills reports that inbound UK commercial property investment peaked at £27.2bn for 2017, amounting to a 1% increase compared with a year ago. Office space attracted the highest demand, at 39% of investment in H1. Moreover, the firm highlighted a 50/50 split in investment volumes between London and the rest of the UK.

The report revealed that downward trends for current yields will be particularly evident in six sectors, however, with yields hardening for food stores, M25 offices, regional offices, retail warehouses, industrial distribution and industrial multilets.

“UK commercial property is in good health with investors continuing to be attracted by its underlying strengths. Indeed, volumes in H1 could have been higher, but have been held back by lack of sellers, rather than any reluctance from buyers,” said joint head of UK investment at Savills Richard Merryweather. 

Savills expects total returns for the UK commercial property market to stand at 5.5% for 2017, with further improvements forecast. 

This article is sourced from fDi Magazine
fDi Magazine

Global greenfield investment trends

Crossborder investment monitor

fDi Markets is the only online database tracking crossborder greenfield investment covering all sectors and countries worldwide. It provides real-time monitoring of investment projects, capital investment and job creation with powerful tools to track and profile companies investing overseas.

Click here to find out more about fDi Markets

Corporate location benchmarking tool

fDi Benchmark is the only online tool to benchmark the competitiveness of countries and cities in over 50 sectors. Its comprehensive location data series covers the main cost and quality competitiveness indicators for over 300 locations around the world.

Click here to find out more about fDi Benchmark

Research report

fDi Intelligence provides customised reports and data research which deliver vital business intelligence to corporations, investment promotion agencies, economic development organisations, consulting firms and research institutions.

Find out more.