In Swelling Financial Storm, Safe Haven in UK Property

Colliers International reports that international investors still consider the United Kingdom (UK) a good bet for property buys despite a slip in GDP and wider financial turmoil in …

Colliers International reports that international investors still consider the United Kingdom (UK) a good bet for property buys despite a slip in GDP and wider financial turmoil in the Eurozone, including the election of a French president many see as a political wild card. The GDP drop signified a double-dip recession for the UK, but the report suggests market perception remained unfazed. Demand is stable for prime properties in Central London and the rest of the region appears stable, perhaps sustaining slight declines over the course of the year. For more on this continue reading the following article from Property Wire.

The UK is still seen as a safe haven for real estate investment as economic sentiment is stable despite a marginal fall in GDP in the first quarter of 2012, according to the latest property snapshot from property advisors Colliers International.

Overall transaction levels remain limited as investors take stock. Central London continues to lead and regional markets are seeing some movement. Finance remains absent. Prime yields are stable and secondary is weakening, the report says.

Retail sales remain very sensitive to price, it also points out. Rents continue to fall as retailers dispose of surplus units and landlords continue to brace for further stress.
City rents and incentives are stable, but demand is uneven. West End supply is tightening with demand and rents in non-core sub markets rising. Regional centres are quiet, although Leeds is active and Birmingham is poised for further growth.

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Leasing demand and development, especially for large scale facilities remain off the pace due to uncertainty. The double dip recession is not helpful, but does not appear to have changed market perception greatly, the report adds.

In the residential market modest house prices declines are expected in 2012 as sentiment weakens and banks begin to push up mortgage rates. Foreign support for London prime is being tested, but demand appears to be steady.

‘The UK economy remains flat with GDP in the first quarter of 2012 falling by 0.2% quarter on quarter. In contrast, the weighted average of purchasing manager indices over the first quarter was 54.5 consistent with economic expansion,’ said Walter Boettcher, director of research and forecasting at Colliers International.

‘Retail sales volume rose 0.8% over the quarter; and unemployment improved slightly, falling from 8.4% to 8.3%. Capital markets showed few effects of the announcement. Positive news from the US and successful bond auctions in the Eurozone suggest that weak performance is accompanied by stability,’ he explained.

‘The downside has already been factored in and other data sources suggest greater underlying strength. The French election has also had a very limited effect. If anything, the result has boosted safe haven property investment both in the UK and Europe,’ he added.

This article was republished with permission from Property Wire.


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