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UK Commercial Property Investment Sees Widespread Decline

UK Commercial Property Investment Sees Widespread Decline

Recent research conducted by Sirius Property Finance, as reported by Property Industry Eye, has highlighted a significant decrease in the level of investment in the UK commercial property market across various sectors during the past six months, in comparison to the preceding half-year period. This analysis underscores the ongoing challenges faced by the UK's commercial property market.

Industrial Sector Records Most Substantial Decline The research reveals that the industrial sector experienced the most significant decline, with investments falling by 55%. Over the past six months, investments in the industrial sector totalled £2.9 billion, a notable decrease from the £6.9 billion recorded in the previous half-year period.

Decline in Office Space Investment Office space investments also witnessed a significant reduction, decreasing by 55% over the last six months. This decline was largely attributed to a substantial 63% reduction in investments outside of central London. Nevertheless, office spaces continued to attract the highest total investment, amounting to £3.8 billion.

Challenges in the Retail & Leisure Sector Investments in the retail and leisure sector decreased by 45%, with a marked 75% decline in shopping centre investments and a 74% reduction in leisure investments.

Transaction Activity Declines Regarding transaction volumes, the office sector saw the most substantial decline, falling by 44%, primarily due to a 64% decrease in transactions in central London. Retail and leisure transactions also decreased by 40%, with shop units experiencing a severe decline of 47%. Industrial transactions declined by 35%.

Average Investment per Transaction Drops The research indicates a decline in the average investment per transaction across all sectors. The industrial sector saw the most significant drop, decreasing by 35%, from £22 million to £14.3 million. Office space investments decreased by 19%, while for retail and leisure, the decline stood at -8%.

Challenges and Economic Uncertainty Kimberley Gates, head of corporate partnerships at Sirius Property Finance, provided insights into the findings, stating, "It has been a challenging six months for the commercial sector. The sector has been grappling with difficulties since the onset of the pandemic and the subsequent shift away from town and city centres. The additional economic uncertainty has further exacerbated the situation."

The research highlights the challenges faced by the UK's commercial property market, reflecting the impact of evolving economic conditions and changing investment trends across various sectors. These findings provide valuable insights into the dynamic landscape of the UK's commercial property market.


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