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PRS flavour of the month for investors

By James Buckley - Tuesday, May 08, 2018 10:49

A survey of nearly 200 real estate professionals has suggested that specialist property will continue to grow in 2018, with the Private Rented Sector (PRS) predicted to be the most attractive sector to investors.

The poll, conducted at Knight Frank’s 7th annual Specialist Breakfast, revealed that 94% expected the specialist property sector to grow in market share and portfolio weighting in 2018.

This comes as investment volumes into specialist property accounted for 27% of the UK commercial property market in 2017, increasing by 40% year on year to reach an unprecedented £17.7 billion, and are forecast to reach almost £20 billion in 2018, according to Knight Frank’s research.

Over half of those surveyed (51%) identified the PRS sector as the most attractive to investors in 2018, followed by Student Property (18%), Hotels (16%), Healthcare (9%) and Automotive (6%).

Despite specialist property investment volumes eclipsing investment in the retail and industrial sectors, opinion was split as to whether it was ‘the new industrial’, with only 33% agreeing that it was.

Attracting a diverse range of investors, overseas capital made up 33% of the specialist property market and the survey indicated that political uncertainty caused by the UK’s exit from the EU is no longer the primary concern for investors. Fifty three percent of those surveyed believed that the continuing uncertainty over Brexit will not result in less overseas capital investing in UK real estate.

Shaun Roy, Head of Specialist Property Investment at Knight Frank said: “The appetite for specialist property investment is stronger than ever. We continue to see solid and sustained demand, driven by the desire from investors for durable long-income investments with good covenants, resulting in record-breaking numbers, with £72.1 billion transacted in specialist property assets since 2006.

“We expect this demand to continue despite the wider commercial property market potentially seeing a slowdown, with shrewd asset selection leading to more reliable returns from specialist property.”

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