With record-breaking investment levels reached in the UK commercial property in 2015, global real estate company CBRE expect that 2016 will be even better for the sector.
CBRE expects that investment levels in the UK commercial property market will reach £70 billion in 2016, with total returns hitting the 10.1% mark.
The company expects returns to slow after 2016 however, they expect that they will remain strong until 2020.
Income is expected to be the biggest driver for investors and with the UK’s economy going from strength-to-strength, CBRE expects that the industrial property sector will emerge as a star performer with total returns hitting an average of 9.5% per annum.
The central London market has witnessed an influx of foreign investment between 2012 and 2015 however, the tides have started to change in the sense that the regions have emerged as a popular choice.
In 2015, 32% of transactions valued outside of London have attracted investment from overseas countries. As investors attempt to diversify their portfolio, investment in regional markets may continue to rise.
Miles Gibson, head of UK research at CBRE UK commented: “After several years of strong investment and capital growth, 2016 will offer steadier and more sustainable returns for the commercial property market. The UK economy remains strong, underpinning the rental value growth which will form a much more important part of investor returns than in the last few years.
“Overseas investment will remain strong and increasingly diversified as London maintains its status as the global centre for property investment. But we predict increasing interest in, and outperformance by, office and industrial property markets in the wider South East and other big UK cities, and a long-awaited recovery in retail.”