Property Sector Set to Weather Uncertainty in 2018
Despite the ongoing economic and political uncertainty, the UK property sector is predicted to continue to do well. This is validated by a report from the largest commercial real estate services and investment firm, CBRE.
CBRE forecast the UK will see continuing economic growth despite apprehensions caused by Brexit. These uncertainties will peak during 2018, bringing further consequences for consumer and business confidence. Growth in employment is likely to slow down further, and rental growth is likely to be inconsistent in some property sectors. The UK economy in 2018 is expected to grow at about 1.5% – as fast as 2017 – due to strong US and European growth. Consumer spending looks more subdued, even though there are no further interest rate rises expected until early 2019.
While some property sectors will have a rocky 2018, the industry and logistics sector will see growth. Also, the bed sector, which includes hotels, built-to-let, healthcare and student accommodation, is set to grow strongly in the coming year.
Property investment is expected to remain the same as 2017 due to strong overseas interest, and property returns are expected to be 4% in 2018.
A weaker UK economy will bring a slowdown in occupier demand and retail growth, and retailers and leisure companies could have a worse year due to reduced consumer spending.
This is a big year for Brexit. Withdrawal issues have eventually been agreed, but trade and migration policies still remain an area of uncertainty for real estate. Shortages of workers in areas like hospitality, retail, healthcare and construction remain, and trade access cannot be guaranteed in the highly regulated service and financial sector. With these issues outstanding, some businesses are rumoured to be getting ready to move staff elsewhere in the EU. Despite Brexit, global demand is set to rise overall by 2020 for student accommodation, such as Canterbury student accommodation https://canterburystudenthomes.co.uk. While UK student numbers stabilise, the number of international students is set to rise dramatically in the next ten years. Investment in student accommodation has risen by 17% year on year, with an expected figure of £5.3bn in 2018.
The influence of overseas investors is expected to continue in 2018, especially in the office sector, where a lack of new development in recent years has led to an occupational demand imbalance.