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News Release

London

UK real estate investment volumes hit record £65billion in 2014

UK regions hit all-time high of £28billion


​London, 9 February 2015 – Statistics released today by JLL show direct real estate investment in the UK hit a record £65 billion in 2014, 3% higher than the pre-recession peak in 2006 and 16% higher than 2013’s total of £55billion. The UK is the second largest commercial property market in the world, and now accounts for 18% of all global transactions.

One of the major drivers of growth in investment volumes was capital flows into the UK regions, which hit £28bn, a 70% rise from the previous year and the highest on record. The South East, Scotland and the North West were the top three UK regions for investment, with volumes of £5.7bn, £3.2bn and £3bn respectively. This represents a 29% increase on 2013 volumes for the South East, 82% for Scotland and 41% for the North West.

London was the leading global destination for direct real estate investment in 2014, recording £27.5billion of transactions. Some £17.5billion of this was from overseas meaning that, despite volumes being 2% down on the previous year, the city remains by far the most popular in the world for cross-border real estate investment.

Domestic investors accounted for 53% of all transactions, a 3% drop in 2013’s total. Overseas investment was dominated by American capital, accounting for 11% of total volumes, followed by Chinese capital at 4%.

The office sector remained the dominant property asset class, with £29bn of investment volumes, up 13% from 2013. This was followed by the retail sector, at £13bn, representing a 19% annual rise and the industrial sector recording £7bn (a 30% increase).
The most dramatic change has been in alternative asset classes such as healthcare, student housing and hotels accounted for 19% of transactions in 2014, up from just 3% in 2009.

Chris Ireland, Chairman and Head of Capital Markets UK at JLL said: “2014 activity cemented the UK as one of the best markets for direct real estate investment and one that is being driven by both domestic investors attracted by the relative high returns property offers, and overseas investors drawn to the liquidity and transparency of the UK property market. In light of the low interest rate environment and volatility in other asset classes, we envisage another robust year for UK commercial property.”

Jon Neale, Head of UK Research at JLL said: “As a result of ageing populations and growing global affluence, there is an ever-growing weight of money desperately seeking yield. The UK property market is likely to continue to offer stronger returns than most other asset classes. This is reinforced by rising confidence in the UK economy, not just in London but in the regions. Moreover, with base rates likely to remain at their record low levels for the remainder of 2015, the income available from property is likely to remain very attractive over the whole of the year ahead.”