With the property market outlook
indicating a positive trend, we are in for a season of good growth
forecasts. BNP Paribas' forecast for instance has recently predicted
fairly impressive rental growth in just about every sector by 2016. The
same forecast predicts 2015 as the best year for the office and retail
sector with the prediction of a somewhat less than 12 percent return.
Current real estate situation
The earlier forecasts have proven
correct, and the trends seem likely to continue. The pricing and rental
demand are forecast to grow because of the lack of occupational supply.
In addition, further investments in the region around London will
continue because of the inherent strengthen of the region.
Of the total UK investments so far, 47
percent has taken place in Central London alone which accounts for more
than £12bn. Of this investment in total, nearly two thirds was invested
in the office sector, while investment in mixed use asset constituted
about 20 percent. In addition, the transaction volumes have been
bolstered by overseas demand.
Nearly 50 percent of investments in
central London could be attributed to the buyers from outside the
region, while the far eastern buyers contributed nearly one fifth of the
total investment.
Foreign investors have also invested
nearly one third of the investments made outside of London. The total
investment outside London is nearly £14bn. North Americans, Middle
Easterners and the Europeans are popular buyers in the UK property
market.
Predictions for 2013
There are several predictions for the
current year. It is expected that there will be a slight improvement in
the total investment volume this year. Last year, it was £33.5bn, which
could go up to around £35.5bn this year.
According to Claire Higgins, BNP Paribas
Real Estate head, this year London is expected to finish its
performance at the top level. The total returns from central London
retail is expected to be highest this year at 13 percent, while city
offices will most likely perform at around 8.7 percent with West End
offices returning around 10 percent. The 2013 forecast for all property
is likely to be 6.6 percent, while industrial return is expected to be
7.3 percent.
In other words, there is overall optimism for 2013 in real estate
investment which it is expected will continue throughout the coming year
ahead. At this rate it is expected that the peak of 2008 could possibly
be surpassed shortly with much of the momentum building up in 2013.
Future forecasts
The future forecasts indicate a bright
prospect with the next five years up to 2017 leading to the national
recovery. The other markets too will be driven to catch up with London.
Strong returns are expected by the south-east offices. Shopping centers
and logistics will follow the south east office sector closely.
The growth momentum comes from the U.
K’s economic position which currently looks brighter and there is little
likelihood of the momentum sliding back in the short term. The current
growth trend of the U.K appears better than some other countries, while
the output is yet to catch up with the peak of pre-recession years.
However, the UK economy is still behind France, and other nations like
U.S and Germany.
It may be interesting to note that
between 2008 and 2013, the UK real estate industry claimed to be the
third most productive. The first two were transport equipment followed
by services.
Written by Les Calvert writer of Overseas Property news
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