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UK year-to-date volumes slip 30% but prospects improve

Investment into UK commercial real estate is 30% down so far this year compared to the same period last year.

According to new research from Colliers International the August figure of £1.1 billion brought the year-to-date total up to £23 billion compared to £32 billion in the equivalent portion of 2019. The August figure had fallen from July’s £2.1 billion.

A shortage of stock hampered industrial market (Photo: Hannes Egler, Unsplash)

The UK economy experienced a mini-boom in August, helped by the government’s Eat Out to Help Out scheme, and the reopening of businesses after lockdown. Sterling also surged at the end of August.

Colliers International’s deputy UK chief economist Oliver Kolodseike said the slow-down in investment activity was disappointing but not unexpected.

“The good news is that as of 16 September, we have already surpassed August’s figure and we expect a considerable uptick in activity for the remainder of the year,” Kolodseike added.

Colliers said that cross-border investors were particularly active in the UK commercial property market in August and accounted for 60% of all investment deals by value, which was up from 50% this time last year. Globally, cross-border investment accounted for just 20% of all transactions.

Colliers said investment was down in almost all asset classes in August but industrial investment has been hampered by a lack of investment stock and £200 million was transacted in August, up from a weak £131 million in July.

The largest deal in August by value was Columbia Threadneedle’s purchase of the Project Victoria portfolio, comprising industrial assets, development land, and hotel and office space around the Manchester, East Midlands, and Stansted airports for £340 million.