in 2020
The UK commercial property investment market has seen a significant drop in 2020 due to the coronavirus pandemic. This is a major shift from the record levels of investment seen in 2019, when the UK was the second largest commercial property investment market in Europe.
According to the latest figures from Real Capital Analytics, the total amount invested in UK commercial property fell by 48% in 2020 compared to 2019. This is the largest annual drop since the financial crisis of 2008-2009. The decline was driven by a sharp fall in investment from overseas investors, which fell by 65%. Domestic investors also reduced their activity, with investment falling by 40%.
The decline in investment was largely driven by the restrictions imposed by the coronavirus pandemic. Lockdown measures and social distancing rules have had a major impact on the commercial property sector, with many businesses forced to close or reduce their operations. This has led to a sharp fall in rental income and a rise in vacancy rates, making it difficult for investors to make a return on their investments.
Despite the significant drop in investment, there are some signs of recovery in the UK commercial property market. Investment activity has started to pick up in recent months, as investors take advantage of lower prices and increased availability of properties. In addition, government support measures such as the Coronavirus Job Retention Scheme and business rates relief have helped to support businesses and reduce the impact of the pandemic on the sector.
The outlook for 2021 remains uncertain, however. The UK is currently in the midst of a second wave of coronavirus cases and further restrictions may be imposed if the situation does not improve. This could lead to further disruption to businesses and further falls in investment activity.
Overall, the UK commercial property investment market has seen a significant drop in 2020 due to the coronavirus pandemic. However, there are some signs of recovery and government support measures have helped to reduce the impact of the pandemic on the sector. The outlook for 2021 remains uncertain, however, and further restrictions may be needed if the situation does not improve.