Has foreign investment in UK commercial property finally slumped?
In a previous post we examined the possibility that, while foreign investment in London might be slowing down, the regional commercial property market was still thriving. However, latest research indicates that foreign investment as a whole may have finally reached its peak. What does a potential slump mean for UK landlords?
Decline in investment?
2015 may have been the second best year on record for property investment in Britain, but a new report released by commercial property information provider, CoStar Group, indicates that foreign investment is not quite as robust as initial figures would suggest. Director of Market Analytics at CoStar, Richard Yorke, commented: "Despite [2015] being a record year for international capital investing in UK commercial property, we have started to see signs that the market is slowing down. Total investment in the second half of 2015 was down 19% compared to the second half of 2014."
In particular, Middle Eastern investment dropped to its lowest level since 2012. And despite a 62% investment rise from the Far East, overall investment for the second half of 2015 still decreased by 19% from the previous year.
The future outlook
The high levels of investment seen over the previous 18 months could mean that good opportunities are more difficult to find, while stock market volatility, worldwide political uncertainty and weakened oil prices indicate this trend will continue into 2016. However, investment in regional cities is expected to carry on, with Richard Yorke stating: "Although 2016 is likely to be a more challenging year, our clients report that investors will continue to target new opportunities in the Big Six and other regional cities."
The future of foreign investment in the UK commercial property market may be uncertain, but landlords can prepare for what lies ahead by increasing and protecting their cash reserves. Recovering your commercial rent arrears in a timely and professional manner is an effective way to future-proof your business.
