With 2016 proving to be a year full of surprises and uncertainty, businesses around the world are seeking advice as to how to best navigate 2017. Property experts at global real estate advisor, Colliers International, offer their predictions for the UK property market in the coming year and the outlook for the industrial sector in particular.
“After a momentous 2016, punctuated by June’s EU Referendum and November’s US election, global real estate advisors Colliers International predicts a somewhat uncertain 2017 for the UK property market, peppered with reservations about European political stability and Trumponomics. However, with uncertainty comes opportunity. The UK remains one of the most transparent and active places to do business, and currency arbitrage by international investors is opening up opportunities for new and greater investment which will no doubt help to drive the UK real estate market in 2017,” said Tony Horrell, CEO UK & Ireland at Colliers International.
Predictions for the UK property market:
1. Investment volumes to recover
UK property volumes will recover slightly in 2017 as investors see through Brexit uncertainty and will exceed £50 billion.
2. Investor base will widen
“With sterling remaining competitive, further new entrants, particularly from Asia, are expected to help support the UK market. As has been the case for some years now, the liquidity and transparency offered by the UK will continue to attract global institutional money as allocations to real estate increase to above ten per cent of assets under management,” said Richard Divall, Head of EMEA Capital Markets at Colliers International.
3. The UK will retain its safe haven status
“US foreign and economic policies will cause substantial shifts in global capital flows with considerable capital flight from emerging markets and from markets with increased political uncertainty. The UK will see increased inflows as global instability enhances the UK’s safe haven status,” said Mark Charlton, Head of Research and Forecasting at Colliers International.
4. Recovery in oil prices will provide a boost for Scotland
“The SNP will come under increasing pressure to focus on its “day job” rather than doom mongering over Brexit. A recovery in oil prices will benefit the Aberdeen economy and regional property market,” said Douglas McPhail, Head of Office, Glasgow at Colliers International.
5. Total returns to recover, slowly
“Total returns in 2017 will show a very modest recovery over the 2016 collapse, but will struggle to breach two per cent. Rental growth for all property will be flat and the minus three per cent negative capital growth trend seen in 2016 will be replicated in 2017,” said Martin Mahmuti, Associate Director, Research and Forecasting at Colliers International.
6. Mayoral elections will be the catalyst for growth
“The May 2017 mayoral elections in Greater Manchester, Liverpool City Region, Sheffield City Region, Tees Valley, West Midlands and West of England will be the catalyst for further regional growth and investment in these regions” said Andrew McFarlane, Head of North West, Liverpool & Manchester City Regions at Colliers International.
Outlook for the industrial sector:
“The industrial sector is set to be the strongest performing sector for the next four years with annualised returns in excess of seven per cent. This is supported by an acute shortage of quality stock in many parts of the country and the insatiable demand from “want it now” consumers driving e-commerce logistics demand,” said Len Rosso, Head of Industrial and Logistics at Colliers International.