According to CBRE, levels of investment in the UK commercial property market have reached a peak in 2015, however prices are not expected to soften just yet.
In a piece in the Financial Times, it said the firm predicted that for a number of years, UK real estate prices would be fairly high and by 2020, as rental growth moderates, total returns will decline.
CBRE’s Chief Executive, Bob Sulentic, commented: “There’s a wall of capital out there that wants to be invested in real estate.”
London’s cycle is moving ahead compared to other European cities, with investment volumes in urban centres across other areas continuing to grow. Analysts at the firm has said the UK was “probably at the peak of the market in investment volume in the current cycle, a little above the last cyclical peak of about £62bn in 2006.”
The number of international investors in the UK accounted for 32 per cent, up from the previous 20 per cent. In the coming two years, CBRE expect similar investment volumes. They also predicted total returns from the UK asset class of 10.1%, which is below the 17.8 per cent peak of 2014 and 13.1 per cent in 2015.
Head of UK research at CBRE, Miles Gibson, added that the highest level of investment volumes reached by Central London offices was 2013.
It was also predicted by CBRE that a rise in the UK’s interest rates will come as late as 2017.
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