Global real estate services firm JLL has predicted that total investment volumes in the UK property market in 2018 is likely to be £55 billion. This is less than the £60 billion investment volumes and 10 per cent returns the firm expects for 2017.
Though the impact of the removal of the capital gains tax exemption for overseas investors in the UK commercial property will be felt, the new regime will not deter investors in the long-term. The firm has predicted that the UK, and London particularly, is likely to be a key destination for Japanese and Korean investors this year.
The firm’s predictions also include the sustained and resilient performance of the industrial and logistics sector and a continuation of the boom in deals for flexible office providers, as more corporates take space. While proptech will continue to transform the industry, JLL highlights digital construction as one area that could have more dramatic impacts over the next few years.
According to JLL, 2018 will be the year in which many companies finally make decisions about their business strategies post-Brexit. Nevertheless, GDP growth looks set to be around 1.5 per cent in 2018, roughly in line with 2017 and well ahead of some of the more pessimistic forecasts produced at the time of the referendum.
Reasons for investing in UK property remain – liquidity, lot sizes, landlord-favourable leases, the strong economic and leasing fundamentals, and at present, relatively high yields and a weak currency.