Table of Contents
Executive Summary
-
- The market
- Commercial property market demonstrates solid performance in 2017
-
- Figure 1: Value of UK commercial property market, 2009-17
- Investment market supported by continued influx of overseas buyers and a better than expected economic performance in 2017
-
- Figure 2: Investor-owned share of UK commercial property market, 2013-17
- Retail remains largest sector of commercial property market
- Share of office sector rises to 31% in 2017
- Industrial property outperforms all other major sectors in 2017
- Investors continue to be attracted to ‘alternative’ assets
- Outlook for industrial and ‘other’ commercial property market remains positive, but sentiment in retail sector weakens
-
- Figure 3: Segmentation of the UK commercial property market, by sector, 2013-17
- Market factors
- Record low interest rates provide positive impetus for investment market, but hikes are on the horizon
- BOE downgrades economic growth forecast for 2017
- Business rate hikes contribute to woes faced by retailers
- Companies
- Overseas investors are the largest investor type in the UK commercial property market
- Institutional investors are the second largest investor type
- Real Estate Investment Funds (REITs) dominate shopping centre sector
-
- Figure 4: Holdings in commercial property market, by investor type, 2017
- What we think
Key Insights
-
- What is the impact of Brexit on the UK commercial property market?
- What is the short-term outlook for the key sectors of the commercial property market?
- Why are ‘alternative’ commercial property assets becoming more popular with investors? Which assets attract the most attention?
Introduction
-
- Definitions
- Methodology
- Abbreviations
- Market positioning
- The commercial property performance cycle
UK Economy
-
- Overview
-
- Figure 5: Forecast GDP development 2017-22
-
- Figure 6: UK GDP quarterly development, 2004-18
- Inflation
- House prices
-
- Figure 7: UK house price changes, 2007-18
- Interest rates
- Consumer spending
- Manufacturing
-
- Figure 8: UK manufacturing, 2014-18
- Business investment
-
- Figure 9: UK GFCF 2003-17
- Imports
- Exports
Market Factors
-
- Key points
- Economic factors
- UK Purchasing Manager Index (PMI) for Services Industries
- UK Manufacturing Purchasing Manager Index (PMI)
- Retail sales and rise in online sales
-
- Figure 10: Growth of value of retail sales at current prices seasonally adjusted, 2011-17
- Other factors
- Impact of planning laws on commercial property supply
- Supply and demand factors
- Latest business rates revaluation has biggest impact on London retail and office sectors
- Proposed to Capital Gains Tax (CGT) for offshore vehicles could dampen overseas investor sentiment
- Return on property investment
-
- Figure 11: Annual property returns, by sector, 2013-17
- Government Hubs programme to boost regional office take-up in the short term
- New stamp duty rates for commercial property
- Non-residential property transactions
-
- Figure 12: UK non-residential property transaction completions, by country, 2013-17
-
- Figure 13: UK non-residential property transaction completions, 2013-17
- Private commercial construction output
-
- Figure 14: Long term trend in private commercial construction output in Great Britain, 1970-2017
-
- Figure 15: Analysis of private commercial construction in Great Britain, by type, 2013-17
- Private industrial construction output
-
- Figure 16: Long term trend in private industrial construction output in Great Britain, 1970-2017
-
- Figure 17: Analysis of private industrial new construction work in Great Britain, by sector 2013-17
Market Size & Segmentation
-
- Key points
- Overview
- Commercial property investment market proves robust in 2017
- ‘Alternative’ commercial property attracting increased interest from investors looking for secure, long-term income
-
- Figure 18: Value of UK commercial property market, 2013-17
-
- Figure 19: Value of UK commercial property market, 2009-17
- Figure 20: Investor share of UK commercial property market, 2013-17
-
- Figure 21: UK commercial property floorspace and rental value, 2009-16
- Market segmentation
- Segmentation by sector
-
- Figure 22: Segmentation of the UK commercial property market, by sector, 2013-17
-
- Figure 23: Sector share of investor-owned commercial property stock, 2017
- Segmentation by investor-type
-
- Figure 24: Holdings in commercial property market, by investor type, 2015-17
-
- Figure 25: Investor commercial property market, by sector, South East and rest of UK, 2017
Office Sector
-
- Key points
- Overview
- Overseas investors drive growth in London office sector
- Shift away from owner-occupied offices
- Rise in demand for flexible workspace
- Investors look to prime regional office markets for investment opportunities
- London offices
- London office supply pipeline
- Regional office supply pipeline
-
- Figure 26: Capital value of the UK office market, 2013-17
-
- Figure 27: UK offices market, by region, 2017
- Figure 28: Office property transactions in Great Britain, 2013-18
-
- Figure 29: Office Property transactions by investor type, year-to-date 2018
- Figure 30: UK office floorspace and rental value, 2010-16
Retail Sector
-
- Key points
- Overview
- UK retail property sector undergoes major structural change, driven by online and multichannel retail
- Retail property owners continue to face considerable risks amid rising rate of retail failures and store closures
- Winners emerge out of the structural change
- Investor sentiment remains cautious in the retail sector
- Shopping centre developments embrace the leisure ‘experience’ economy
- Investors return to supermarket property after a few years of muted activity
-
- Figure 31: Capital value of the UK retail property market, 2013-17
-
- Figure 32: UK retail property market, by sector, 2017
- Figure 33: Retail property transactions in Great Britain, 2013-18
-
- Figure 34: Shopping centre property transactions by investor type, year-to-date 2018
- Figure 35: Retail warehouse property transactions by investor type, year-to-date 2018
-
- Figure 36: Shop/supermarket property transactions by investor type, year-to-date 2018
- Figure 37: UK retail floorspace and rental value, 2010-16
Industrial Sector
-
- Key points
- Overview
- Momentum in rental growth is maintained in 2017
- Industrial & logistics continues to represent one of the most attractive sectors for investors
- Low levels of supply remain an issue in logistics
-
- Figure 38: Industrial speculative development under construction, February 2013-January 2018
-
- Figure 39: Capital value of the UK industrial property market, 2013-17
-
- Figure 40: UK industrial property market, by region, 2017
- Figure 41: Industrial property transactions in Great Britain, 2013-18
-
- Figure 42: Industrial property transactions by investor type, year-to-date 2018
- Figure 43: UK industrial floorspace and rental value, 2010-16
Other Commercial Sector
-
- Key points
- Overview
- Investor appetite in UK hotels sector remains strong
- Operators to focus on maintaining and enhancing margins
- Budget and Four-Star hotels lead UK hotel development pipeline
-
- Figure 44: Active hotel development pipeline by grading, Q4 2017
- Diverse leisure sector remains popular with investors, attracted by secure long-term income opportunities
-
- Figure 45: Capital value of the UK other commercial property market, 2013-17
-
- Figure 46: UK “other” commercial property market, by sector, 2017
- Figure 47: Property transactions in the leisure sector in Great Britain, 2013-18
-
- Figure 48: UK “other” commercial floorspace and rental value, 2010-16
Regional Analysis
-
- Key points
- Regional analysis of non-domestic properties in England & Wales
-
- Figure 49: Number of non-domestic rateable properties in England & Wales, by sector and region, as at 1 April 2017
-
- Figure 50: Rateable value of non-domestic properties in England & Wales, by sector and region, as at 1 April 2017
- Regional analysis of commercial property transactions
-
- Figure 51: Commercial property transactions in Great Britain, by region, 2013-17
-
- Figure 52: Regional importance in commercial property transactions, 2015-17
Market Trends
-
- Key points
- Development of commercial property yields
-
- Figure 53: Prime market yields, by sector, 2015-18
- Rental price developments
-
- Figure 54: Prime office rents in the UK, December 2011- December 2017
-
- Figure 55: Prime retail rents in the UK, December 2011-December 2017
-
- Figure 56: Prime industrial rents in the UK, December 2011-December 2017
- Trends in average lease lengths
-
- Figure 57: Average length of leases, by tenant type, 2017
- Shift from owner-occupied towards rented commercial property
- Trends in commercial property lending
- The commercial property lending market has seen increased diversification and specialisation over recent years
-
- Figure 58: Outstanding debt secured by commercial property lender, by lender type, 2017
- New loan originations remained flat in 2017, with a stronger performance in the second half of the year
-
- Figure 59: Allocation of new loans originations, by lender-type, 2017
- Average loan-to-value ratios remain below 60%
Industry Structure
-
- Key points
- Overview
-
- Figure 60: UK investor share and overseas investor share in each commercial property sector, 2016
-
- Figure 61: Holdings in commercial property market, by investor type, 2017
- Overseas investors
-
- Figure 62: Overseas holdings in commercial property market, by investor type, 2016
- REITs
- Institutional investors
-
- Figure 63: Holdings in buildings, property, land and new construction work by institutional groups, 2011-16
-
- Figure 64: Net investment in buildings, property, land and new construction work by institutional groups, 2012-17
Company Profiles
British Land
-
- Company strategy
- British Land cuts exposure to speculative developments post Brexit vote
-
- Figure 65: Financial analysis of British Land, 2013-17
Landsec/Land Securities
-
- Company strategy
-
- Figure 66: Financial analysis of Land Securities, 2013-17
Great Portland Estates
-
- Company strategy
-
- Figure 67: Financial analysis of Great Portland Estates, 2013-17
Hammerson
-
- Hammerson pulls back from Intu takeover
- Company strategy
-
- Figure 68: Financial analysis of Hammerson, 2013-17
Intu Properties
-
- Company strategy
-
- Figure 69: Financial analysis of Intu Properties, 2013-17
Derwent London
-
- Company strategy
-
- Figure 70: Financial analysis of Derwent London, 2013-17
A & J Mucklow Group
-
- Company strategy
-
- Figure 71: Financial analysis of A & J Mucklow Group, 2013-17
Hansteen Holdings
-
- Company strategy
-
- Figure 72: Financial analysis of Hansteen Holdings, 2013-17
Daejan Holdings
-
- Company strategy
-
- Figure 73: Financial analysis of Daejan Holdings, 2013-17
SEGRO
-
- Company strategy
-
- Figure 74: Financial analysis of Segro, 2013-17
Shaftesbury
-
- Company strategy
-
- Figure 75: Financial analysis of Shaftesbury, 2013-17
Workspace Group
-
- Company strategy
-
- Figure 76: Financial analysis of Workspace Group, 2013-17
Bruntwood
-
- Company strategy
-
- Figure 77: Financial analysis of Bruntwood, 2013-17
LondonMetric Property
-
- Company strategy
-
- Figure 78: Financial analysis of LondonMetric Property, 2013-17
Grosvenor Group
-
- Company strategy and outlook
-
- Figure 79: Financial analysis of Grosvenor Group, 2013-17
Market Forecast
-
- Key points
- Commercial and industrial construction output forecast
-
- Figure 80: Forecast private commercial construction output in Great Britain, 2018-22
- Figure 81: Forecast of private commercial construction in Great Britain, by sector, 2018-22
-
- Figure 82: Forecast private industrial construction output in Great Britain, 2018-22
- Figure 83: Forecast of private industrial new construction work in Great Britain, by sector 2018-22
- Commercial property market forecast
- Outlook for commercial property market remains cautiously optimistic despite concerns following Brexit vote
- Investor sentiment remains largely positive
- Investor demand focused on secure income streams
- Investor appetite for alternative assets remains strong
- Core regional centres attract increased investor interest
- Northern Power House and Midlands Engine to support regional growth
-
- Figure 84: Forecast of UK commercial property market, 2018-22
-
- Figure 85: Development of the UK commercial property capital value, 2013-17 (historic) and 2018-22 (forecast)
- Figure 86: Projected investor share of UK commercial property market, 2018-22
- Market forecast segmentation
-
- Figure 87: Forecast segmentation of the UK commercial property market, 2018-22
-
- Figure 88: Forecast segmentation of the UK commercial property market, 2018-22
Further Sources & Contacts
-
- Trade associations and bodies
- British Property Federation
- The Association of Real Estate Funds
- British Council for Offices
- The Commercial Real Estate Finance Council Europe
- The Investment Association
- The Investment Property Forum
- Trade exhibitions and conferences
- RICS Commercial Property Conference
- MIPIM UK 2018
- Trade magazines
- Estates Gazette
- Property Magazine International
- Property Week
- Property Wire
Back to top