The value of UK commercial property has fallen from £926 billion in 2015 to £883 billion in 2016, according to a new report from the Property Industry Alliance (PIA).
This is a 4.6 per cent decrease, which occurred in the months following the EU referendum.
PIA Chair Bill Hughes, Head of Real Assets at L&G comments:
“While the total valuation has dropped, at £883 billion, commercial property’s value is the equivalent of around 40 per cent of the value of both the UK stock market and UK government gilts. Overall, commercial property still accounts for about 10 per cent of the UK’s net wealth, similar to what was reported by the PIA last year.”
The report also reveals that:
- Commercial property accounts for 13 per cent of the value of all buildings in the UK (total value of almost £7 trillion)
- The property industry contributed around £63 billion to the UK economy last year – 3.7 per cent of the total UK economy
- Direct and indirect exposures to commercial property account for £183 billion of UK insurance company and pension fund investments that support the nation’s savings
- The commercial property industry directly employs almost one million people – one in every 35 jobs in the UK
- Retail and offices are the two largest commercial property sub-sectors, accounting for 38 and 31 per cent of the industry’s total value respectively. Industrials come in third place – expanding in 2016 due to increasing appetite for logistics centres from internet retailers.
Mr Hughes adds:
“This report demonstrates that, despite the political uncertainties, the commercial property industry continues to contribute strongly to the UK economy in many ways. It finances and constructs new buildings. It invests in and manages the accommodation needs of retailers, businesses, distributors, manufacturers, hoteliers and many parts of the public sector. It also maintains these buildings and facilitates the buying, selling and letting of such property on behalf of owners. In total, these activities directly contributed about £63 billion to the economy in 2016 – representing 3.7 per cent of the UK’s Gross Value Added.”