UK commercial property values rising at a slower pace

As the UK moves closer towards a formal exit from the European Union, the MSCI IPD real estate index highlights that commercial property values are rising at their slowest rate in three months.

The value of commercial assets grew at a rate of 0.25% in January, a slow recovery from the dramatic and immediate declines seen in June 2016.

The closely watched index – which draws data from more than 3,000 property investments worldwide – has tracked the UK’s commercial property values since the vote for Brexit in June. While prices have held up better than could have been expected, analysts warn that values could fall this year in the wake of the EU exit and the subsequent uncertainty around such a move.

Buyer and occupier uncertainty

In the wake of the imminent EU exit, several firms are said to be looking at moving jobs overseas amidst concerns of their businesses' ability to bridge and service EU clients once the country has left the European Union. 

The uncertainty leaves mega-companies including HSBC and UBS with the option to consider moving up to 1,000 jobs each out of their UK offices. Prime properties are selling at discount rates and landlords have been offering better incentives in order to attract tenants.

Post-Brexit relocations

In response to Brexit, a quarterly industry survey conducted this month showed 18% of respondents had reported evidence of firms looking to relocate away from the UK, 4% up from the previous survey.

Furthermore, 32% of those surveyed in Central London noted evidence of possible relocations.

"There are clients researching other potential locations in case they need to make decisions (to move)... Inevitably there may be a proportion that go in that direction," James Beckham, head of central London investment at property consultant Cushman & Wakefield, has commented.
If you're concerned with rising commercial property values and would like to seek advice and guidance, contact Dukes Bailiffs.