UK commercial property falls further out of favour as sentiment swings towards France and Germany

Enthusiasm among international investors for the UK commercial property market has continued to wane over the past quarter, according to BrickVest’s latest commercial property investment barometer.

According to BrickVest’s data capturing the views of over 6000 international professional real estate investors, only 27% view the UK as their preferred market, a 4% fall in the past 12 months.

Appetite for the UK property market among German investors fell to 14%, down from 19% year-on-year while in France it slipped to 10%, almost half the portion (19%) from a year ago.

France is the biggest beneficiary of the UK’s decline with a 20% year-on-year increase in international investment sentiment while support for Germany rose by 7%.

Underlining increased concerns of an imminent turn in the cycle, the Barometer reveals a sharp fall in the projected volume of assets under management (AUM) investors are planning to deploy into real estate over the next 12 months. Overall, investors expect to commit just 2.5% of their total AUM, a 33% fall on their planned allocation of 3.7% in Q2 2018.

Increased caution is also seen in the increased appetite for lower risk strategies, which rose 4% during the second quarter to 27% while high risk sentiment fell over the same period by 3% to 22%.

Emmanuel Lumineau, CEO at BrickVest, commented: “The latest figures of our Barometer reveal the continued negative effect of Brexit uncertainty on the UK commercial property market among international investors and particularly those based in France and Germany. We can expect this to continue over the third quarter and the October deadline at the very least. In the meantime, France and Germany are becoming more attractive destinations for international real estate capital. However, we’re likely to see a sharp drop in capital allocations to real estate over the next 12 months as nervousness about the end-cycle conditions will see many investors taking a circumspect approach.”