Real estate company Savills has reported that it has experienced a drop in commercial property transactions in the first half of 2018.Its income from commercial property deals in the first six months of 2018 was £33.9 million, a drop of 14% compared to the same period in 2017.
Although Savills said that it is facing “challenging market conditions” it is not pessimistic. They said that overseas investors are still committed to the London commercial property market and many overseas businesses want to expand to Britain.
Savills blames the drop in commercial property sales to uncertainty caused by Brexit. They believe that investors are taking a long-term view and are still committed to the property market. The value of the pound and attractive yields make UK commercial property a worthwhile investment. Though interest rates on commercial mortgages have risen because of the Bank of England interest rate rise at the beginning of August 2018, domestic investors are still purchasing property.
Savills advised Facebook on their lease of office space in Kings Cross, London. The deal that Facebook signed in July 2018 was the fifth largest leasing deal recorded in Britain. A lot of high profile businesses have committed to renting London office space.
Overseas, property transactions handled by Savills in China were delayed in the first quarter of 2018. This was due to the Chinese trade dispute with the United States, but transactions are now increasing. Savills shares were down 5.4% following the publication of their trading history for the first six months of 2018.