UK commercial property value reaches all-time high
The value of the UK’s commercial property stock reached an all-time high of £871bn in 2015, representing 10% of the UK’s net wealth, a new report from the Property Industry Alliance (PIA) reveals today.
This is an 11% increase on the 2014 value and has been driven by higher rents as well as the prices investors were willing to pay for a given rent.
PIA chair Bill Hughes said: “To put this in context, at £871 billion, commercial property’s value is the equivalent of 40% of the value of the UK stock market and almost half the value of UK government gilts.”
The report also reveals that:
•Commercial property represents 13% of the built environment (total value of around £6.5 trillion)
•The property industry contributed around £68 billion to the UK economy last year – 4.1% of the total UK economy
•Direct and indirect exposures to commercial property account for £178 billion of UK insurance company and pension fund investments that support the nation’s savings
•The commercial property industry directly employs almost one million people – one in every 35 jobs in the UK.
Hughes added: “This report demonstrates the property sector’s fundamental importance to the UK’s economy in providing an attractive asset class for investors of all sizes and for the funds serving the nation’s savers and pensioners.
“However, we believe more could be done in partnership with the public sector to unlock the wider social, economic and environmental benefits of commercial property investment and development.
“We would like to see more connectivity in planning for property and infrastructure investment. The synergies between, and benefits of, infrastructure and commercial property investment are clear, with undeniable links to UK housing, and we hope the Chancellor will signal a change of direction in his autumn statement to stimulate more activity in what has been an area of underinvestment over the past few decades.
“In a post Brexit environment it is crucial that we build an economy that enables home grown and global companies to thrive and prosper in the UK, delivering economic and social value to all corners of the country as advocated by the Prime Minister.”