The downward trend in UK commercial property values will bottom out this year according to Deloitte. Although the market will show little sign of improvement until later in the year, 2013 is expected to mark the beginnings of the long awaited recovery.
Deloitte’s forecast follows the Halifax’s similarly optimistic outlook for the residential market and points towards growing confidence among businesses and investors as the UK slowly emerges from recession.
Anthony Duggan, head of real estate research at Deloitte, says that while the prediction could be seen as ‘heroic’ given continuing economic uncertainty, he believes there are ‘compelling reasons’ to support the forecast. He continues to say that he expects investors to be searching for opportunities in wider areas of the market than we have seen previously during the economic crisis.
Andy Rothery, Deloitte’s head of real estate, believes that overseas investment will be the driving force behind the projected recovery.
“The inflow of foreign capital buying real estate is set to exceed that recorded in 2012; coming from both established players and more new entrants,” he said.
Meanwhile a separate report reveals that commercial property investment in London hit a five year high in 2012. Throughout the recession London has remained insulated from the difficulties facing the wider domestic market and last year topped all post 2007 records, according to Cushman and Wakefield.
2012 saw a 25 per cent increase in activity when compared to the previous year, with £13.57 billion worth of transactions completed in the capital. Once again, overseas investors were driving the market accounting for a huge 80 per cent of transactions during 2012.
Bill Tyser, head of city investment at the firm, says that the factors contributing to the trend include the secure nature of freehold property, a relatively weak pound and the ease of access to the market. For these reasons he expects overseas interest in the London market to continue into the foreseeable future.
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