UK commercial property market resilient to fears

By Liam Brooke, co-founder
  • Nine-year high (127,280) commercial property sales completed in 2016/17
  • Number of sales jumped 6% in just one year

 

Fears of a fall in commercial property transactions following the referendum have been shrugged off as purchases by investors hit a nine-year high of 127,280 in 2016/17, up 6% from 119,920 in 2015/16 says Lendy, Europe’s leading peer-to-peer secured lending platform.

The significant rise in commercial property transactions demonstrates the continuing attractiveness of UK commercial property to both domestic and overseas investors.

Lendy explained that the UK property market is the most liquid in Europe and has a number of features, such as upward-only rent reviews and long leases, that are absent in other overseas commercial property markets.

The fall in the value of sterling since the Brexit vote in June 2016 has made the UK property market more attractive to foreign property buyers who are hungry for yield in a low interest rate environment.

Lendy added that properties in the UK usually have longer leases than those in Europe – leases on commercial property are usually over five years. Long-term leases can aid stability for investors and offer more settled returns over a long period and the chance of lower void periods (when a property lies empty at the end of a lease term).

In addition, upward-only rent reviews (rents cannot fall at a rent review) which are still dominant in the UK protect the investor from a decline in revenue stream caused by a weaker economy.

Liam Brooke, co-founder of Lendy, commented: “The attractiveness of the UK property market for overseas investors has continued, shrugging off the threat of a crash in sales post-referendum.

“The number of commercial property sales has risen significantly, reflecting how the fall in the value of sterling has provided investors with a window of opportunity to make the most of the booming property market.

“Considering all the fears around Brexit it’s a strong showing, and illustrates that investor confidence is resilient.”

 

HMRC: UK Property Transactions Count, year ending April 30 2017