In times of political uncertainty, it's often a given that the property market takes a hit too. However, recent reports from the latest index show that capital values across the UK continued to increase by up to 0.4% in May 2017, apparently unaffected by the snap general election.
The commercial property market’s national average was notably buoyed by the inclusion of Central London offices, with West End and Mid-Town offices' values increasing by 1.1% month on month.
Capital value increases
According to a monthly report published by CBRE, the office sector recorded an increase of 0.6% on average in May. Rental values in the second month fell but were boosted by Outer London/M25 offices, whose rental value grew by 0.3%.
Across the UK, retail capital values were up by 0.3% in May, supported by 0.6% increases reported by commercial warehouses. Data provided by CBRE’s report showed the capital value growth in the industrial sector slowed by 0.1% with rental values slowly increasing.
"This was largely another 'steady-as-she-goes' month for UK commercial property, with capital growth and total returns at respectable levels, but driven by yield movements rather than rental growth," said Miles Gibson, head of UK research at CBRE.
How can political events affect commercial investments?
Elections and referendums may ‘make it tough’ for potential investors to put money in the market in that long-term assets ultimately follow economic trends. These trends, in turn, are affected by political changes and uncertainty. For those with funds to invest, the key point to remember is timing.
Capital values may see peaks and troughs in a recession, but it is often about riding out the storm. Take note from the CBRE’s report and focus on reaping the return on your investment through capital growth or direct income.
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