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Investor Guide to Europe 2014
unITED
KInGDoM
The united-Kingdom is one of the largest
commercial real estate markets globally, and in
terms of invested stock is the largest across Europe.
The Uk attracts investors from across the Globe, with many
overseas investors concentrating their activity towards Central
london. Activity across the rest of the Uk is relatively lower
and focussed more towards the key cities and prime shopping
centres. Domestic activity across the Uk is strong and typically
represents over half of total activity. However over the last
decade we have consistently seen net sales from domestic
investors.
The Uk also has a well established investor base of its
own, with many institutional investors and listed property
companies. legislation to create REITs came into effect in
2007. The Uk also has a well established fund management
sector for both listed and unlisted funds, with many funds
domiciled offshore in Uk or foreign jurisdictions. The depth
and breadth to the investor base supports strong levels of
liquidity.
Given the maturity of the market it is relatively easy to
establish new funds in the Uk, subject to meeting regulatory
requirements.
Debt funding is also relatively easy to secure, especially for
core assets. The majority of funding is provided by both
domestic and overseas banks which are active in the Uk
market. In recent years there has been growing activity from
institutional lenders (predominantly insurers) and private and
institutional debt funds.
Market sizing
United kingdom
Europe
Invested stock*
(Total stock)
EUR 670bn
(EUR 940bn)
EUR 3,380bn
(EUR 8,150bn)
liquidity ratio*
(10y average)
8.0%
(7.5%)
4.0%
(4.5%)
2013 volumes
(10y average)
EUR 52bn
(EUR 50bn)
EUR 139bn
(EUR 135bn)
Investment activity by source of capital, 2013
Source : DTZ Research
Investment activity by asset type, 2013
Source : DTZ Research
Market pricing – london (Q4 2013)
office
(City)
Retail
(West End)
Industrial
(Heathrow)
Current Yield
4.75% 3.50% 5.50%
Min/Max
(10y)
4.25-7.00% 3.50-5.75% 4.00-7.50%
Yield
definition
net initial yield
Source : DTZ Research
* 2012 figures
