The UK property market is on track for a swifter recovery than expected, CBRE has said.
The company’s updated mid-year forecasts anticipate that investment will reach £53bn by the end of the year, a 26% rise on 2021.
It added that logistics and multi-family residential were already reaching record highs.
Around £1.5bn worth of deals in the multi-family sector were done in H1 2021, reflecting a 30% increase year-on-year. The the sector is forecast to hit £4.2bn by the end of 2021.
Demand for shed space is unlikely to slacken, as CBRE predicts that online retail sales growth alone will require the development of a further 59m sq ft by 2025. Logistics investment volumes have already soared by 122% in Q1 2021 compared with Q1 2020.
CBRE expects the residential market to soften only slightly as the government’s stamp duty holiday tapers away, predicting house price growth of 5.9% by the end of 2021.
It is also anticipating further regulatory action on climate change following the COP26 climate talks in Glasgow in November, with a particular emphasis on wider and deeper reporting of real estate emissions.
But for some sectors the outlook is less rosy. The office sector, it says, will continue to be depressed until normal levels of occupancy are being actively encouraged by the government. Retail rents are expected to fall by nearly 10% against last year, and continued difficulties are expected for the hotel sector due to ongoing international travel restrictions.
Miles Gibson, head of UK Research, said: “The UK economy, and UK real estate, has mostly bounced back faster than we expected in December 2020, and there is potential for a further acceleration if remaining Covid-19 issues can be effectively resolved – especially those relating to returning to the office and international travel.
“Some real estate sectors, especially logistics and residential, have already performed very strongly, and the second half of 2021 is likely to be almost as strong – potentially even stronger. Even better, the UK’s vaccination programme – among the world’s most successful – puts the country in a great place to reclaim the top spot on international real estate investment after the temporary uncertainties created by Brexit.”
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