Commercial property investment slowly recovering from Brexit shock
INVESTMENT activity in the West Midlands’ commercial property sector is picking up after experiencing a slowdown in all the uncertainty leading up to the EU referendum.
Transaction volumes in the region totalled £784m in Q2, according to the latest edition of Lambert Smith Hampton’s quarterly UK Investment Transactions (UKIT).
The figure was well above the five-year average of £496m and 52% above the same quarter last year. However, it was down 18% on the first quarter of the year.
Adam Ramshaw, head of LSH Birmingham and East Midlands, said: “It’s not surprising there was a slowdown in the run-up to the referendum but as the dust begins to settle, confidence is returning to the market.
“Birmingham and the West Midlands continue to be an attractive region in which to invest and that is demonstrated by the positive statistics borne out in our analysis, which show that it is still above the five-year quarterly average.
“It’s important to emphasise that it is still business as usual in the West Midlands and we expect investors to continue their interest here.”
There is also positive news for the Midlands Engine region, which has continued to surge ahead with investment in Q2 hitting £1.3bn.
Nationally, the report concludes that UK commercial property prices are expected to fall by a double-digit percentage over the next six months.
It predicts market uncertainty generated by the UK’s decision to leave the EU will lead to an 11% fall in capital values by the end of 2016.
However, the impact on prices will vary, it concludes.
Values will hold up well for prime and secure long-income stock, reflecting the ongoing weight of global capital and a flight to quality seen in the wake of the vote.
Nationally, investment activity levels remained subdued in the run-up to the referendum, with transaction volumes totalling £9.8bn during Q2 – down 18% on Q1 and 45% below the same period last year.
The main drag on overall activity was the alternatives sectors (which includes healthcare, student housing and the private rented sector), where volume of £1.2bn was 74% lower than in the same period in 2015.
