Given the political uncertainty surrounding Britain at the moment making predictions for the UK commercial property market in 2019 can be a tricky business. However, with the right planning there may still be potential to be successful in the market.
Brexit effect
Brexit may well be causing people to be feel uneasy about investing in the property market, but so far the only negative effects are being felt in London, and on high value properties worth over £2 million. This may be simply because of a heightened fear factor when investing larger sums of money. Regional markets have allowed the average property price through-out the country to continue to rise. You can search the market at proplist.com Another consequence of Brexit could potentially be more positive. As the value of pound is steadily decreasing against other currencies, it is becoming more attractive for foreign buyers to invest their money in the UK property market, and subsequently keeping the demand and property prices reasonably flat. There is still high demand for industrial real estate and despite Brexit the outlook for property investing still looks good.
To see if the commercial market can thrive in 2019 it is important, we look at some different sectors within the market, and how they fared in 2018.
Logistical properties
With or without Brexit urban logistics is one sector forecasters agree on being one of the strongest. Changes in consumer buying habits have caused demand for purpose-built warehouses to suddenly rise. Due to online buying companies are now looking for large distribution centres to store boxes that can be as big as 1.5 square feet as well as smaller buildings needed for last-mile deliveries. For more information on the logistics market click here.
Retail properties
The previously mentioned size in growth for logistical properties has been equalled by the reduction of tenants in need for physical retail properties. In 2018 there were well over 1,000 stores failed. In the last three months of 2018 shopping centre values fell by 3.7 percent with records also showing that retail rentals went down by approximately 1.5 percent. Lower capital values have caused total negative returns of 8.3 percent, making retail property the weakest sector in the commercial property market.
Office space properties
In recent times low rental value has made building new office spaces unprofitable for developers. Because of this during a time when demand for office space has actually grown, the supply for office space has been restricted by a lack of new constructions. In the meantime, the desire for flexible office spaces has gradually increased. This sector took the most space of all business service sectors in 2018. Wework are the leaders in the flexible office space market and they operate at a loss, despite large numbers of customers.
Healthcare properties
Primary healthcare is another sub-sector that is showing constancy. People will still need healthcare with or without Brexit. The elderly population continues to rise, and with it the need for medical care with purpose-built medical centres. Primary healthcare facilities are designed to offer a wider variety of facilities and offer a bonus of being more economical. More of these properties can help ease the burden on overworked hospitals and the emergency services.
It is of course difficult to predict the future of the any market and the commercial property market is no different. Brexit is certainly an unknown factor to consider, however if we look carefully at the market trends of 2018 and the different sectors it can help us make the most informed decisions.