Council investment in commercial property increases
Investment in commercial properties by local authorities increased again last year, according to official Government figures.
The provisional outturn data showed that council spending on acquiring buildings and land increased by 4.5 per cent in 2018/19, reaching a total of £4.21 billion.
The Government does not require local councils to separate and submit official figures for capital purchases of commercial property, meaning that it can be difficult to find the specific figures for commercial property investment.
Overall, it was the highest figure for the purchase of land and buildings, but the 4.5 per cent rise is significantly smaller than the 43 per cent and 138 per cent increases that have been seen in the previous two years.
Previously, Martin Easton, Head of Capital and Treasury at Birmingham City Council warned that the current trend of an increase in borrowing to invest in commercial property was “sweeping the sector”.
The Chartered Institute of Public Finance and Accountancy (CIPFA) is set to publish more guidance on commercial investments, with experts believing that local authorities are becoming more aware of the risks in the property market.
Don Peebles, Head of Policy and Technical at CIPFA, said: “Commercial investments do not sit well with the primary purpose of local authorities, which is the delivery of quality services to local residents. CIPFA welcomes a slowdown in such investments.”