UK investment market cools down, but could see influx after Iranian sanctions lifted

There was a total of £67.5 billion invested in UK commercial real estate in 2015, a figure which was down 5% compared to the £70.7 billion in 2014. Nevertheless, last year is still the second strongest performing year on record, and a massive 46 percent above the 10-year average.

Some of the key driving factors in the slower rate are the increasing geo-political factors impacting investment decisions, in addition to the enhanced competition towards prime real estate. However, regional markets in the UK have seen a growth in investor appetite, with the large six regional cities seeing record levels of office investment.

Foreign investment into the UK real estate market has increased from £26.2bn in 2014 to £27.8bn in 2015 – a 6 percent increase. However, there has been a decline in investment from the Middle East, largely due to the rapid decline of oil prices and political uncertainty in the region. Far Eastern investment has filled the gap in investments with huge increases of 62% over the last year.

Although there has been a sharp decline in Middle Eastern investment over the last year, the lifting of sanctions from Iran could open the doors to huge amounts of investment from over 1,000 high-net-worth individuals, who would finally be allowed to diversify their portfolios – the UK commercial real estate market is a great opportunity and considered a safe haven for their money.

Eugene O’Sullivan, Managing Director at tenant acquisition agency Morgan Pryce, said: “Morgan Pryce believes the next few years could see a new player in the London investment market. Iranian HNW individuals would see the London commercial property market as a perfect place to safely store their money. Iran has the second largest GDP in the Middle East, but investment opportunities have been restricted since 2006, when sanctions were imposed on the country due to the suspicions surrounding Iran’s nuclear weapons program. Once this has been fully lifted, we can expect to see an influx of Iranian money.”

This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.