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Commercial property investment slumps as UK economy weakens

The scale of investment in UK commercial property has fallen in all sectors, new research suggests. 

Sirius Property Finance has analysed UK commercial property investment over the past six months, comparing it directly with the previous half-year. 

The largest decline was in the industrial sector, falling 55 per cent in just six months. In the most recent half year this sector has attracted £2.9 billion, down from £6.9 billion in the six months before that. 


Office space investment has declined by 55 per cent in the past six months, driven by a 63 per cent drop in investment outside of central London. Despite this, office space is still receiving the highest amount of total investment of any commercial property sector, at £3.8 billion.  

Meanwhile, retail and leisure is down 45 per cent, with a 75 per cent drop in shopping centre investment; close behind comes a 74 per cent fall in leisure investment. 

In terms of the number of transactions, offices have seen the sharpest decline - falling 44 per cent over the UK and 64 per cent in central London. Retail and leisure transactions have fallen 40 per cent, driven by shop units dropping 47 per cent. 

The average amount of money invested via each transaction has also fallen across the board. The biggest drop has come from the industrial sector, falling 35% from £22m to £14.3m. 

The average investment made into office space has reduced by 19 per cent. 

Kimberley Gates, head of corporate partnerships at Sirius Property Finance, says: “It has been a difficult six months for the commercial sector. It has been struggling since the start of the pandemic and the subsequent retreat from town and city centres, but now that additional economic uncertainty has been placed on top, the situation has worsened.”


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