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Step aside Germany: UK is top place for commercial property investment

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The commercial property investment market in Germany experienced a steep decline in the last quarter of 2017 from 34% to 23%, while the UK upped its game from 27% to 29% – making it the most popular destination in the world.

A barometer from property platform BrickVest saw Germany fall from its top spot in terms of popularity as a commercial property investment location, from a sample of 3,000 international investors. The UK took first place, with Germany dropping into second spot, followed by the US which was chosen by 19% of investors, and France with 18% of investors.

The primary investment objective for 38% of participants was the hunt for income, which was an increase of 6% from the previous quarter. On an annual basis, risk appetite across the barometer’s major countries had gone up “significantly” compared to 2016.

Emmanuel Lumineau, CEO at BrickVest, said: “Our latest Barometer reveals that Germany is no longer the favoured destination for commercial real estate investment, contrary to its position in Q3 2017. Rather, the UK has once again become the most popular region for our investors.”

Moving away from capital cities

Interestingly, the report also found that “secondary cities” – those outside the capital – had seen a marked increase in popularity. This is something that has already begun to shift in the residential markets in the UK, as London house prices flatten out and cities such as Manchester and Birmingham and the surrounding areas see improved performances. It follows on that as commercial space often comes at a premium in capital cities, there may be more gains to be made by investors who branch out to the regional parts of the country.

One major commercial property business, Bruntwood, which owns more than 100 buildings in places including Manchester, Cheshire and Birmingham, recently revealed its turnover had grown by 11% to £131.5m last year, which the firm believes is a sign of the sector’s resilience “against a backdrop of change and uncertainty in the wider world”.

Looking ahead to 2018, BrickVest’s Lumineau commented: “As the year progresses and we continue to conduct our barometer, it will be interesting to see how the industry adapts to these underlying factors affecting the real estate market.”

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