UK Commercial Property

Industrial leads yield-driven recovery in values

The recovery in UK commercial property continued into August, despite a backdrop of more equivocal economic data. But, while the economic softness should be short-lived and returns for 2021 are likely to remain healthy, we suspect that the real estate recovery will struggle to maintain its current pace. The upturn so far largely reflects a yield-driven boost from the industrial sector, which we think will temper next year, while any revival in office and retail sectors remains hamstrung by structural concerns.
Andrew Burrell Chief Property Economist
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Annual property returns hit a seven-year high

Commercial property ended last year strongly. Annual rental growth climbed to a five-year high, while annual total returns crossed the 20% level. This was largely the result of dynamism in industrial, though all sectors saw positive annual returns, even retail. But we think it will be a struggle to repeat this stellar performance in 2022, as economic headwinds and structural changes weigh on rental growth and the scope for further yield reductions reduces. As a result, we expect returns to be significantly lower in 2022.

21 January 2022

UK Commercial Property Update

Industrial yield falls set to slow

The industrial sector had its best year in over three decades in 2021 as demand soared and supply struggled to keep up. Although we expect the sector to perform well again this year, we don’t think that yields can continue to fall at the rate seen in 2021.

20 January 2022

UK Commercial Property Update

Which assets can provide the best inflation protection?

Recent data have reinforced concerns about inflation risks in the UK. We remain of the view that property investments provide only limited long-term protection against higher prices, but of the individual asset types, we think industrial and residential are best placed to weather any surge. In view of the wider interest, we are also sending this UK Commercial Property Update to clients of our UK Housing Service.

14 January 2022

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Limited risks to DM property from Evergrande

The Evergrande crisis has made waves in financial markets this week. But, while the developed property markets we cover may see some short-term upheaval, we think the impacts outside of China are unlikely to be severe or lasting. In view of the wider interest, we are also sending this UK Commercial Property Update to clients of our Commercial Property and Housing Services.

23 September 2021

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Will the rental backlog derail the retail recovery?

One feature of the COVID-19 era has been persistent non-payment of rents, particularly in the retail and leisure sectors. But we don’t think this will come to a head next year once the eviction ban lifts, as by then the economy should be in better shape and landlords will have little interest in forcing the issue.

17 September 2021

UK Commercial Property Update

Are we underestimating the global property upturn?

The most recent commercial property data have been surprisingly upbeat and have raised the possibility that the recovery could be stronger than expected. But we think investors may have run ahead of themselves and this trend is unlikely to be sustained given the weak rental outlook. In view of the wider interest, we are also sending this UK Commercial Property Update to clients of our US Commercial Property service & European Commercial Property Service

16 September 2021
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