The Size and Structure of the UK Property Market: A Decade of Change

Value of UK Stock Rises more than 10% over the Last Decade and Property Investments by over 25%

One of the topics of enduring interest to the UK real estate industry is the size and structure of its market. The latest report published by the IPF Research Programme, The Size and Structure of the UK Property Market 2013: A Decade of Change, looks afresh at questions raised 10 years ago: what is the value of commercial property in the UK; who owns this property; and what is the size and structure of the investment market? This new research addresses two further questions: how does residential property compare with commercial; and, in a world where ways of getting an exposure to property have become more fragmented, what is the beneficial interest held in UK property by institutional investors?

Key findings

• The value of the UK's commercial property stock in mid-2013 was £647bn, an increase of 11% on 2003.
• The amount of real estate held as investment totals ¢G364bn, an increase of 27% over the last decade.
• Overseas investors dominate the City office market (56% of the total) and are the largest single owners of West End and Midtown offices, owning a third of the stock.
• Three-quarters of their property holdings are situated in London.
• Commercial investors' interests in residential property are small relative to both the size of the private rented sector (c. 2%, including student accommodation) and the size of their property portfolios (c. 5%).
• While UK institutional investors (insurance companies and pension funds) have been reducing their directly owned property holdings, greater indirect investment through vehicles such as unlisted funds means that they have a beneficial interest in almost a third of UK commercial property.

Alan Patterson, Global Head of Real Estate Research at AXA REIM and chair of the IPF Project Steering Group, commented: "The last ten years have seen significant changes in the UK property investment market: the rise of residential sector, the shift from domestic institutional to foreign ownership of central London, and the declining dominance of retail property. This new analysis reflects these changes and is particularly important for those benchmarking against the market."

Author, Paul Mitchell, of Paul Mitchell Real Estate Consultancy, said: "The growth in investors' holdings of UK property over the decade not only reflects overseas buyers' huge  ppetite but also the expertise of domestic investors in developing new buildings and opening-up new markets such as health care, budget hotels, and student accommodation. The next decade will require further innovation."

The Size and Structure of the UK Property Market 2013: A Decade of Change

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