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Commercial property investment to continue

CBRE is forecasting that the total investment in UK commercial property will be around £70bn in 2016. Furthermore, CBRE predicts attractive total returns of around 10.1% in 2016, declining thereafter but remaining positive through to 2020.

A strong economy and an increasing role in e-commerce suggests that the industrial property market will outperform with total annual returns of 9.5% on average for each of the next five years. Retail property is expected to experience happier times as consumer disposable incomes recover, with returns of 7.0%, while recovering supply in the office market will constrain total returns to 7.4% on average each year to 2020.

Foreign investment has long been one of the main drivers of the Central London market; this rose further in 2012-13, but has levelled out at around 70% of all Central London investment in 2014-15. In contrast, foreign investment has not historically been a significant part of the UK market outside Central London, making up only around 20% of acquisitions. However, in recent years foreign investment outside London has increased. In 2015 so far, 32% of transactions (by value) outside London have attracted foreign buyers from 31 different countries - a noticeable increase in the diversity of investors.

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