The UK non-domestic commercial property market has experienced a decline in value, according to recent analysis by Sirius Property Finance. The analysis focused on rateable values of commercial properties, which are properties used for purposes other than living accommodations, such as shops, offices, and warehouses.
The Numbers
The analysis revealed that there are over 2 million non-domestic rateable properties in England, with London being home to the highest proportion, accounting for 16% of these properties. London saw a marginal increase of 0.2% in the number of properties compared to the previous year, adding approximately 3,750 properties to its portfolio.
Currently, the rateable value of non-domestic properties in the UK stands at over £63.5 billion, showing a marginal reduction of -0.1%. While this may seem like a small decrease, it amounts to a drop of nearly £77 million in value. Consequently, the average rateable value per property is £31,488 per year.
Sector Breakdown
Among the three primary non-domestic sectors analyzed, the industrial sector boasts the highest volume of commercial rateable properties, with a total of 532,680 properties. However, it is the retail sector that holds the highest total rateable value, reaching £15.9 billion in 2023.
Despite the retail sector experiencing a -0.3% reduction in volume and a -0.9% decrease in total value compared to the previous year, it still remains the most valuable non-domestic sector. The office sector has also seen a decline of -1% in both volumes and total rateable value.
On the contrary, the industrial sector has witnessed growth in both the number of rateable properties (up 0.7% annually) and the total value of these properties (up 1.1%).
Market Outlook
Nicholas Christofi, the Managing Director of Sirius Property Finance, noted that the rateable value of non-domestic properties in the UK has marginally declined over the past year despite the challenges faced by the commercial sector. However, the slight increase in the number of properties indicates a level of confidence within the commercial space.
While the overall reduction in values may seem minor, it still amounts to a significant £77 million compared to the previous year. This figure highlights the sheer size and importance of the non-domestic commercial property sector in England.
Christofi also mentioned that although the retail sector remains the most valuable non-domestic core sector, the industrial space has defied the wider trend by experiencing an increase in both volumes and rateable value.
Considerations for Potential Property Investors
For potential property investors seeking opportunities in the UK, this analysis provides valuable insights into the performance of the non-domestic commercial property market. While the sector as a whole has experienced a decline in value, the industrial sector has shown resilience and growth.
Investors may want to consider the industrial sector as a potential avenue for investment due to its increasing number of rateable properties and rising total value. However, it is crucial to conduct thorough research and due diligence before making any investment decisions.
It is also worth noting that the retail sector, despite its decline, still holds significant value and should not be disregarded entirely. The office sector may present challenges due to its decline in both volumes and total rateable value.
In conclusion, the UK non-domestic commercial property market has seen a marginal decline in value, but there are opportunities for investors, particularly in the industrial and retail sectors. Conducting careful research and seeking professional advice will help potential investors navigate the market successfully.