Domestic investors have increased their activity in the UK commercial property sector with the group accounting for 59% of all acquisitions in the year to July, an increase of 12.9% year-on-year, according to Savills.
In total, domestic investors have spent £18.8 bn on UK commercial property this year as non-domestic investment fell by 21% year-on-year to reach £12.8 bn.
Increased domestic activity is attributed to a strong occupational market in both the offices and industrial sector with both sector’s prime yields tightening by 75 basis points (bps) over the last 12 months.
'The UK commercial property market is in a period of relative stability with prime yields remaining at 4.56%, the same level as at October 2017,' said Mat Oakley, director and head of Savills commercial research.
'There has been some movement in the retail sector with further upward pressure on yields expected in the coming months, however other sectors such as offices and industrial continue to perform well. The rest of the year should see continued appetite from domestic investors, with prime stock remaining the predominant focus of overseas capital.'
Savills said that there have only been 56 deals over £100 mln in the first seven months of 2018, down from 70 in the same period last year. The rising probability of a hard Brexit may also be to blame for the reduction of activity from overseas sources, the company said.