UK Office Investments Plunged In 2020: CBRE
UNITED KINGDOM – CBRE shared that total office investment in the country sharply feel by 56 percent during Q2 and Q3 2020. Still, the property consultancy foresees that it will recover this year after travel restrictions are gradually relaxed, reported The Business Times on Monday morning (11 January, SGT).
It explained that the UK’s office investment sector, particularly in central London, is largely dependent on foreign investors. As such, the travel restrictions have hindered office sales there.
A lifting of barriers to travel is expected to gradually facilitate market deals, noted CBRE, which expects office investments from European funds, foreign institutions, and sovereign wealth funds.
Meanwhile, commercial real estate firms in the UK are mulling to slash their debt and be versatile as the property market is expected to take up to 2 years to recover from the doldrums brought by the COVID-19 pandemic.
Reports from CBRE, Knight Frank, and Cluttons revealed that the government’s instruction to people to work from home as much as possible is leading to vacant offices in London and other metropolises. The new stringent restriction is also severely impacting retail shops along high streets.
“The pandemic will continue to weigh on real estate throughout 2021, although each sector will be affected differently,” said CBRE’s Research Head for the UK, Jennet Siebrits.
“The British worker, employer, consumer, homeowner, or renter will never return to pre-pandemic habits. It is a new beginning for UK real estate in 2021. With change comes opportunity, and the trick for the informed decision-maker is to identify those opportunities now.”
For instance, major property player Hammerson is carrying out some strategies to cope with the situation, including holding large equities rights issuance and divesting several assets to reduce its leverage.
“We will continue to dispose of assets and recycle capital from across the portfolio. The pandemic has exacerbated structural shifts in retail business,” said its Chief Executive David Atkins, who added that the asset sales will reduce debt by 25 percent and recapitalise its business.
He also said that the health crisis has unraveled the UK’s historic leasing model, which he believes is “outdated, inflexible and needs to change”.
Consequently, Hammerson plans to roll out a simpler leasing approach that will provide rising income streams. Besides offering promos, sponsorship, branding, & advertising to assist occupants, it also plans to turn the former Debenhams department store into residential units.
