Investment in UK property will slow down next year before bouncing
back in 2018, according to CBRE’s annual outlook report.
While the UK’s economic fundamentals are believed to be strong, factors including Brexit are expected to subdue levels of investment over the next 12 months.
Total returns from UK property are forecast to be 1.1% in 2017 but will recover to between 6-7% the following year as recent falls in capital values are reversed.
Higher returns are predicted in markets which are short of supply, such as industrial and residential, and markets less affected by Brexit, such as healthcare and student accommodation.
Rental growth in the office market is expected to slow in line with employment growth while prime retail properties are predicted to perform well.imi
Overall, CBRE has predicted that UK GDP will grow by 1.5% in 2017 and by 1.3% in 2018, a trend which is expected to boost occupier demand.
Ciaran Bird, managing director at CBRE UK, said: “There is certainly some cause for optimism when we look ahead to next year with property expected to perform despite ongoing political and economic uncertainty.
“2017 won’t be without its challenges and while the market will without doubt require informed and precise navigation, we are confident that investor appetite for UK property will remain strong, particularly from overseas.
“We actually expect to see some sectors such as industrial property outperform in 2017, whilst housing and newer asset classes such as healthcare and student accommodation will become more prominent on investors’ wish lists.”