Deborah McLaughlin, managing director, Capita Real Estate and Infrastructure
Next year in real estate is almost impossible to predict. Brexit – and the period before and after 29 March – will have a significant influence on the future outlook for the property sector, both commercial and residential.
Consistently across most areas of the economy Brexit has created the greatest market uncertainty in many years, the Real Estate sector is no different. Despite this, to date, the market has remained surprisingly resilient however, as the reality of Brexit looms, that resilience will be tested. Add to this, challenged occupier markets, weaker sterling and the potential for increased inflation and interest rates, we have a perfect-storm of uncertainty.
However, at some point in the New Year, we hope to have clarity re: the Brexit exit and that will crystallise decisions; market resilience will be tested and investors and occupiers alike will reflect on the reality of the situation and make decisions accordingly.
The real estate market is made up of many sectors, distinguishable by property type, but also the distinct differences between occupier and investor markets. Since confirmation of the leave vote, analysts and commentators have looked for evidence demonstrating a significant shift in the property markets – however, across sectors, a degree of resilience has existed.
Looking at each sector, here are my reflections on this year, plus some thoughts on what we’ll be seeing in real estate in 2019:
1. Residential
2. Office
3. Retail
Brexit alone is not the only influencer of short- and medium-term market sentiment, with general inflation, interest rates, changing markets and wage inflation all impacting occupier profitability and investor sentiment against the context of a well-priced existing market.
A level of certainty with Brexit, coupled with positive government intervention and investment will remain key to long-term viability and growth in this sector, enhancing investor appetite and occupier growth.