UK commercial property investment volumes in the first quarter of 2018 reached £12 billion, 11.6% down on the same period in 2018 but 14% above the long-term average, and there are reasons for optimism in the market, according to Savills.
The international real estate advisor says that, compared to previous record-breaking years, volumes in the first three months of 2018 appear muted, but Q1 volumes were 9.2% up on the ten year average and 14.1% up on Savills series average.
In addition Savills highlights in its latest Commercial Market in Minutes report that with inflation having slowed to 2.5%, regular pay growth at 2.8%, and low unemployment levels, it expects UK consumer confidence to grow once more after being hit in 2017, benefitting the retail sector in particular.
Mark Ridley, CEO of Savills UK and Europe, comments: “While first quarter investment volumes are down year-on-year, it would be wrong to assume that this translates into weak investor demand. Taking a wider view, it’s clear that activity in Q1 2018 is broadly in line with previous healthy years and we expect activity to pick up over the course of the year as underlying fundamentals improve.”
Mat Oakley, director and head of Savills commercial research team, adds: “First quarters often end with the industry making cautious noises about trading volumes, but 2018 has definitely started with more hesitancy than we expected. With consumer confidence returning however, providing a boost for the much maligned retail sector, and a substantial group of investors active in the market, future quarters should be healthier. In particular, as town centre dominant shopping centres are now yielding above 7.50%, we expect to see more opportunistic investors swooping in this sector, with an estimated £900m of shopping centres currently under offer.”