UK commercial real estate investment activity rebounded in December and early this year, total transactional activity for January 2020 was not as strong as January 2019, says Savills.
December 2019 saw a surge in commercial real estate investment activity, with UK volumes for the month reaching £9.7 billion, according to Savills latest Market in Minutes report, with the month accounting for 20% of the entire year’s volume.
Savills analysis of the trading statements of 31 retailers who have reported on their Christmas trading shows that on average total sales were up 5.0%, with half of retailers reporting a better uplift this Christmas than last defying many expectations. Retail yields therefore remain unchanged month-on-month in most markets, says Savills.
Interestingly, says Savills, 70% of the buyers of commercial property across the UK in December were non-domestic, indicating perhaps that the restraint of the rest of 2019 has diminished. This trend was most significant in the West End of London office market, where December accounted for 30% of the entire year’s total investment volume of £5.14 billion. Volumes in this market reached £340 million in January 2020 (up 137% up on January 2019), leading to the prime West End office yield hardening by 25 basis points last month.
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”...investors in the UK clearly feel that the removal of political uncertainty is a good thing...”
“While it’s arguable whether any more economic or legislative stability has emerged from December’s election result, investors in the UK clearly feel that the removal of political uncertainty is a good thing. While early indications are that December’s surge might have been more of a blip rather than a bounce, core investors are returning to the UK. They may be challenged this year by a lack of stock, so while volumes may not boom this year we do expect to see significantly more buyers,” said James Gulliford, joint head of UK investment at Savills.
