Commercial property

Commercial property investment demand looks strong headed into 2017

Posted on Posted in Workspace

The Brexit vote that took place in mid-2016 was forecast to be a particularly negative decision for the UK, with many predicting that businesses would suffer as a result, and that the market as a whole would suffer in the long term thanks to lower sentiment from those who own and run companies.

However, as the move to exit the EU comes closer and closer, the reality is that there has actually been little in the way of change when it comes to the business world. The economy did not contract as it had been expected to, and commercial property demand from new investors grew throughout the second half of 2016, which leaves the sector looking strong headed into 2017.

According to data published by the Royal Institute of Chartered Surveyors (RICS), in the last three months of the year, demand improved quarter-on-quarter across the UK commercial property sector, which was the second time in a row – both post-Brexit – that this had happened.

Demand for commercial property

As many as 21 per cent more respondents welcomed an increase rather than a fall in demand for commercial property in the final quarter of 2016. This was a rise of nine per cent in terms of positivity when compared to the three-month period that came before. It indicates that even as the market was edging closer to Theresa May’s proposed date of the end of March for Article 50 to be triggered, the UK’s businesses remain confident.

And it’s not just domestically that this is the case either. The study from RICS shows that 27 per cent more respondents experienced a rise in demand from foreign investors in the final quarter of the year as well, showing that even without the backing of the EU in the future, the UK’s property market remains a strong prospect for buyers from other countries.

Looking forward, respondents believed that the market will also see capital value increases across a range of different commercial sectors, with industrial properties leading the way, followed by retail and office spaces. And although occupier demand has not increased as much as may be expected headed into the new year, the report says that in the coming months, landlords keeping incentives rising for tenants could mean that the market weathers the storm of uncertainty and remains strong on the other side of Brexit.