Savills is anticipating a 72% drop in UK commercial property investment volumes to £2.75bn for the second quarter of 2020 on a like-for-like basis.
This will be 35% lower than the previous lowest quarter recorded – which was the first quarter of 2009 – and a steep fall on the £12.7bn in investment volumes recorded by Savills for the first quarter of 2020.
A sharp downturn in UK ‘all property’ capital value growth for March (-2.4%) has also been recorded by Savills.
However, less severe monthly falls have been recorded for April (-1.8%) and May (-1.2%), which Savills said was “surprising as in the GFC period from the end of 2007 onwards, month-on-month reductions in capital values increased”. The year-on-year fall in 2020 is currently 7.4%.
“Looking at capital values on an annual basis, the numbers by the end of Q3 2020 will begin to show a levelling out,” James Gulliford, joint head of UK investment at Savills, said.
Gulliford added: “March brought the third largest monthly fall for 10 years, but encouragingly April and May data shows less severe drops and we’re likely to see month-on-month falls recede back to the -0.4% per month, as seen in recent recessionary periods.
“In terms of quarterly investment volumes it’s no surprise that Q2, and by implication the first half of 2020, are well down on last year. But again there are some encouraging signs in the market and we hope that the traditionally quiet summer period will see some of the suppressed demand for UK property begin to come through.”
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