Experts characterize the UK commercial real estate market as indefinite, ambiguous, and turbulent. It is the result of the United Kingdom‘s hesitations concerning the withdrawal from the European Union and contradictions within the parliament.
Despite the fact that the UK remains popular in the investment market, many investors do not hurry to contribute something this year. The volume of investment is one third less than the previous year.
Is Such Caution Justified?
Experts say the successor of Theresa May is likely to support the Brexit. It means that the economy of Britain will remain less positive for some time. Still, the history of the country proves that the economy is resilient to external challenges and recovers rather quickly.
The referendum of 2016 promised to bring a long-term recession in almost all sectors of the British economy. Nevertheless, the regeneration started in 6 months. Now one can see stable growth in GDP, wages, and number of jobs.
London has always been the epicenter of the financial, banking, insurance, digital information, and legal industries. It is predicted to remain the leading capital in Europe.
Today the UK reminds a real Klondike for investors. Due to temporal inflation and reduced competition, one can get a trophy even with a discount.
Where to Invest?
London has remained the most popular and desired place for investment. Compared to the previous year, the dynamics of investment was twice higher and total transactions made € 5,6 billion in the office segment in the first quarter of 2019.
The demand for rental space remains also high but not in new or renovated offices. Rental rates though remain unchanged in most areas of the city and in the perspective of 5 years they are expected to increase further.
The logistics section is also noteworthy. The vacancy rate over the past 10 years has decreased from 25% to 5%. It is the result of excellent online commerce and the perspective for foreign investors after Brexit. It also makes sense to invest in such perspective cities as Manchester, Bristol, Cambridge and Reading.
One more attractive area is the hotel sector. Tourism will always be trendy in the United Kingdom. Experts predict that revenue per room and its average cost will increase by 2.5% in 2019.
Regardless of the Brexit outcome, there will be both losers and winners on the UK commercial real estate market. Today’s investor should be flexible enough and able to adapt to the changing environment.