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Overseas investment in the UK commercial real estate market is having a positive impact and is set to increase over the next three to six months, according to new research. There has been a slight tapering in confidence after nearly two years of consistent growth in optimism and fewer property professionals expect investment to increase but around 60% of UK investors believe foreign investment has had positive impact. Increasing numbers expect activity to stabilise and the North West and London based smaller sized operators are more confident about the future, according to the latest confidence survey of real estate professionals by Lloyds Bank Commercial in association with the Investment Property Forum (IPF). Further analysis revealed that nearly73% of larger sized businesses surveyed and 70% of fund managers agreed, though this figure dipped to 60% amongst SME respondents. Given the increased level of foreign investment into this sector, a significant minority, at least 17%, of all respondents said that they had changed their business investment activity as a result of the influx of overseas capital. In particular 42% of fund managers and 30% of larger sized businesses stated that they have altered their business investment plans due to this influx. ‘For many regional commercial property operators the influx of foreign capital has widened the range of exit options and shifted focus away from UK institutional buyers,’ said John Feeney, global head of commercial real estate at Lloyds Bank Commercial Banking. ‘’Further a variety of foreign buyers are now active in regional UK markets including sovereign buyers seeking stabilised assets and more opportunistic investors willing to take asset management risk,’ he added. The latest survey also indicates that confidence in the UK’s commercial property market remains high, with over 60% of respondents believing that activity will continue to increase over the next three to six months. However, an increasing number believe that the market will level out. Around 25% to 36% of respondents now expect activity to remain at current levels for the next three to six months which compares to just under 20% in the CPCM’s last report in April. In line with a slight softening in confidence, the report suggests that prices will begin to stabilise as well. In the Spring 2014 CPCM only 3% of major businesses said prices would stay the same compared to 30% in this latest survey. Investment activity also looks set to increase, with fund managers reporting a slight increase in their investment intentions, rising from 70% to 72%, as did major businesses, with 53% planning to spend compared to 50% in April. ‘The UK’s market has soaked up a lot of capital over a short period of time and some investors, such as private equity funds, are turning their attention to the nascent investment market recovery in certain Eurozone countries particularly in the periphery,’ said Feeney. ‘The UK market is further advanced in… Continue reading →
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