Structural uncertainty around Brexit will limit the upside for UK property next year, despite a pick-up in activity following the General Election, according to Savills.
The agent said it does not believe a “Brelief bounce” will be as forthcoming as some expect as there has been little distress in the property market since the Brexit referendum vote in 2016.
It said that while retail property has undoubtedly been affected by Brexit uncertainty, the most significant contributor to falling prices and transactional volumes in the retail sector has been e-commerce and omni-channel retailing, rather than a lack of consumer confidence.
In the mainstream residential property market, the weakest-performing areas have been those where household affordability has been stretched and economics are expected to continue to drag on the market, regardless of an end to Brexit-related uncertainty.
The equity-driven prime central London market will be the exception, said Savills, with price growth projected to reach 20.5% over the next five years.
James Gulliford, joint head of UK investment at Savills, said: “Despite the Conservative government receiving a mandate to deliver Brexit, uncertainty over the UK’s relationship with the EU will not immediately diminish, and property will continue to contend with a wide variety of old and new structural, economic and legislative changes throughout 2020 and beyond.
“However, we do expect higher deal volumes next year, particularly in the office and logistics markets, as a number of non-domestic institutional investors that were deterred by Brexit uncertainty re-enter the market, and a rise in opportunistic investor activity in the retail sector, as some buyers now see some assets as competitively priced.”
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