The investment market is moving quickly. Since the outcome of the EU referendum little more than 100 days ago, we have welcomed a new prime minister, interest rates have fallen and the FTSE has raced to 7,000 amid uncertainty about what Brexit will look like.
With general investment volumes for 2016 more than 37% lower than this time last year, it is not hard to see that all this political turbulence has affected the market.
However, while statistics for 2016 so far show that UK institutions and property firms have been net disinvestors of commercial property, private clients from both the UK and overseas have been net investors.
At auction, we have seen volumes increase by more than 25% in 2016 on same period in 2015.
Our most recent commercial sale, earlier this month, raised more than £117m: the largest amount we have sold in one day for a decade. Our private client desk, which focuses on sub-£10m deals, is also exceptionally busy, with transactions up more than 57% in the period from 23 June to now on the same period in 2015.
Looking at yields across different investment classes, it is little surprise that private investors are finding commercial real estate such an attractive asset class. With money in bank accounts earning next to nothing, a secure and reliable income of 4.5% to 6% on commercial property investment looks very attractive. Another contributing factor is the devaluation of sterling, which is making property investment in the UK particularly appealing for overseas investors from the Middle East (particularly Israel) and the US.
In the immediate aftermath of the referendum result, we saw property funds worth £18bn experience considerable outflows of money leading to a suspension of trading. However, only 10 weeks on the same funds saw measured inflows.
Private investors who may not have the cash or desire to own commercial bricks and mortar outright have started to see the appeal of such funds and the relatively attractive returns available.
BlackRock recently pulled the £200m sale of Project Rio because it experienced inflows into the fund, with the improved outlook quelling its previous desire to sell. They subsequently sold a small part of this portfolio to Westbrook for around £80m.
We are also seeing increased liquidity for smaller deals: two or three years ago, sub-£10m investments would not have been considered by the UK institutions and funds.
Now there is significant interest in smaller deals as UK institutions and funds seek out a more mixed spread of lot sizes and are attracted by the increased liquidity of smaller-ticket assets.
The rapid sentiment shifts in the last four months in commercial property investment highlight how quickly markets can change.
The Brexit vote led to a pendulum-like swing in attitudes towards commercial property when doom and gloom in the immediate aftermath led to funds suspending trading and then experiencing significant net inflows as sentiment swung back the other way.
With further major political events set to shake the market again - including the impending US election - we need to accept that volatility is the new normal. Flexing to respond quickly while maintaining a long-term perspective will be essential to make smart investment decisions over the next 12 months.
Scott Tyler is senior partner at Allsop