Commercial property sentiment shifts towards Germany
New research from real estate digital platform BrickVest shows that investor sentiment for the UK commercial property market has dropped in popularity among both international and domestic investors, with Germany emerging as the biggest beneficiary.
In its quarterly survey of over 6,000 real estate professionals, the BrickVest Barometer shows that less than a third (29%) of international investors view the UK as their preferred market, with support among UK-based investors for their home market falling to 40%, its lowest level since the Barometer was launched in Q1 2017.
The UK’s decline has been matched by the attraction of Germany, which recorded its highest ever score (26%). Among UK investors, France achieved a new record high approval score of 16% during the first quarter. Among German investors, 67% expressed a preference for investing in their own domestic German market.The latest Barometer reveals that over the last three months overall appetite for high risk commercial property strategies (i.e. opportunistic and development) has fallen to its lowest ever level of 18% in favour of moderate strategies (i.e. value-add, light refurbishment), which has climbed to a new high of 57%, up 12% year-on-year.In terms of asset type, support for primary assets in tier one cities grew over Q1 among both international and UK investors to 61% and 63% respectively at the expense of secondary cities and regional markets (39% and 37%), reflecting a flight to safety.
At the same time, and significantly, 24% of German investors opted for a high-risk strategy –higher than among any other national group – while only 10% said they were interested in low-risk strategies, again the lowest of any national grouping.
According to Emmanuel Lumineau, BrickVest’s CEO, “Brexit uncertainty continues to take its toll on the UK commercial property market among both international and domestic investors. With no immediate political solution likely, there is every possibility that investor confidence in the UK will continue to slide in the months to come. While not without their own challenges, both France and especially Germany grew in popularity over the preceding quarter.“Our Barometer lays bare the fall in sentiment among investors towards higher risk opportunities as fears of an economic slowdown and an inevitable downwards turn in the cycle gain momentum.”