Months ago, there have already been talks about foreign investors pulling out of UK's commercial real estate market. According to a FT, back in November one of the factors that worry property fund investors is increasing signs that foreign investors are looking to check out of the London market, particularly the Chinese. According to sources, they have been talking about selling.
Investors leaving the UK market might soon be a trend this 2016. More recently, according to Business Spectator, foreign investors reportedly have pulled back from UK's commercial property market. A survey of property agents found that demand from investors overseas for commercial real estate slacked in the last quarter of 2015.
According to the Royal Institute of Chartered Surveyors (RICS), the withdrawal follows the slow dwindling of overall buyer interest in UK commercial properties in more than two years. But even with lesser foreign buyers, interest from other investors keep demand for commercial real estate high. With high demand, limited supply and a flourishing economy commercial property values could continue to grow.
In a statement, RICS Chief Economist Simon Rubinsohn reportedly said, "For the time being, the real estate sector seems largely insulated from the turmoil affecting financial markets."
Meanwhile, London's commercial real estate seem "overpriced to some extent" in the last quarter to 81 per cent of the agent surveyed. That is up by 4 percent compared to the 77 percent in the third quarter. According to RICS, values of offices, shops and warehouses are expected to continue rising because demand for a limited number of asses was aggressive.
Foreign investors were said to have their eyes focused on London last year with $US40.5 billion of commercial real-estate transactions were closed in London last year. That amount is half the total in UK that is $US72.7 billion, according to data-provider Real Capital Analytics.
