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Overall investment volumes in UK real estate were down just under 40% in Q1 2016 compared to Q1 2015. According to Morgan Pryce’s Director Fraser Williams, “The central London office market has also seen a slow down over the last year in terms of investment and uptake, with rental levels dropping off and conditions becoming more favorable for tenants. This is likely due to global economic instability, recently accentuated by uncertainty over the EU referendum. Historically low interest rates, quantitative easing and foreign investment have helped boost UK real estate values, but now that investors are shying away from the UK, prices have started to fall”.
This is particularly evident with US investors: over the last 10 years the US has been responsible for 33% of all investment in UK real estate, however in Q1 2016 this dropped to 18%, which is almost certainly linked to the market being at the top of the cycle and uncertainty over our relationship with the EU. US investment remains strong in key European countries such as Germany and France, where it plays a far larger role than in the UK. A huge 33% of foreign investment in French real estate comes from the US. Investment in Europe has fallen by 9% over the last year, which has undoubtedly been caused by economic issues in Asia and falling oil prices affecting the Middle East, leaving less capital for foreign investment.
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.