Over the last couple years, UK commercial property investors have had a very difficult time. Property values have plummeted and redemptions have been gated. Also, many investors are having to put in more money just to protect their investments from the harmful practices of commercial property fund managers.
It's not only investors in the UK commercial funds who have suffered, as of September 2010, UK commercial property stocks are down by approximately 70% since 2007. For these reasons, prices for commercial property throughout the UK have been declining at a steady rate. London's commercial real estate values dropped 1.5% in September 2010 alone.
However, industry experts are insisting that this could be a perfect time to get back into this market.
UK's commercial real estate market is ripe for international investors and recent indications suggest they are starting to take advantage of these bargain prices. The weakening British pound against the euro, combined with the suppressed prices for commercial and residential properties, has attracted a number of investors from Russia, the Middle East and Malaysia.
According to Mivan Prime in its September 2010 report, half of all prime real estate sales in London have been to international investors. Malaysia's Employees Provident Fund (EPF) recently announced that it would be investing £1billion in Europe's real estate markets. The company also stated its focus would be the UK.
Not only are Malaysian investors enjoying lower prices and higher yields, many invest in UK real estate simply because their children are studying here or will be shortly.
While this is all good news to foreign investors and commercial estate agents, the future can still look a bit gloomy for UK buyers.
New reports from the Confederation of British Industry (CBI) indicate that while the economy will begin to recover in 2011, this recovery will be at a slower rate than previously expected.
CBI director-general Richard Lambert recently stated: "The fragile nature of the recovery is why, in the forthcoming spending review, the government must focus its scarce resources on those areas which most galvanise growth, namely infrastructure and capital investment."
Although UK investors may still be reeling from the single-most severe correction the market has ever endured, analysts insist that the market has rebounded. For investors, both in the UK and abroad, it may very well be the perfect time to break back into the UK commercial real estate market.
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