Deloitte produced a report on the UK real estate market last year, and rightly boast that their comprehensive data sets and advanced research methods meant that they "called most things right". This year's report contains much of interest and can be viewed in its entirety here: http://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Industries/Real%20Estate/uk-re-real-estate-predictions.pdf
Most interesting, is the bravely optimistic call of the bottom of the market in 2013. The report suggests that most of the fallout from the crash has now happened. Firms' behaviour, legislation and wider economic factors including the much sought after return to growth, mean that proper adaption can now occur. Deloitte's chief economist Ian Stewart feels that the road to recovery has begun and that the larger firms in particular, are benefitting from the uniquely privileged access to credit they enjoy.
Accompanying this rise in overall activity, prices are also finally forecast to rise, though not until the second half of the year. Deloitte's prediction for 2012 of falling prices was well borne out by the latest data. However, values are now getting closer to a level where investors are willing to invest, as we have certainly seen is the case in London. The global nature of demand for Grade A commercial property (over £20 billion new investment expected), partially due to its growing securitisation as part of wider bond packages and the poor performance of alternative investments is likely to translate to potential for higher prices. The report then suggests that the UK market should widen, but not at the expense of prime property which will retain its attraction.
The insurance sector continues to make the news; indeed Deloitte's prediction last year that the sector would fill the funding gap in 2012 was realised, with total lending totalling 15% (c.£4.1 billion) of all commercial real estate loans. This is expected to double to 30% within the next five years.
Another interesting aspect of the report is the discussion of improving research methods and more analysable data. Trends and other data are becoming more comprehensive both in range and depth, allowing more efficient analysis and resultant transactions. Such developments can only be positive for both landlords and tenants, as well as agents and other real estate professionals.
Most interesting, is the bravely optimistic call of the bottom of the market in 2013. The report suggests that most of the fallout from the crash has now happened. Firms' behaviour, legislation and wider economic factors including the much sought after return to growth, mean that proper adaption can now occur. Deloitte's chief economist Ian Stewart feels that the road to recovery has begun and that the larger firms in particular, are benefitting from the uniquely privileged access to credit they enjoy.
Accompanying this rise in overall activity, prices are also finally forecast to rise, though not until the second half of the year. Deloitte's prediction for 2012 of falling prices was well borne out by the latest data. However, values are now getting closer to a level where investors are willing to invest, as we have certainly seen is the case in London. The global nature of demand for Grade A commercial property (over £20 billion new investment expected), partially due to its growing securitisation as part of wider bond packages and the poor performance of alternative investments is likely to translate to potential for higher prices. The report then suggests that the UK market should widen, but not at the expense of prime property which will retain its attraction.
The insurance sector continues to make the news; indeed Deloitte's prediction last year that the sector would fill the funding gap in 2012 was realised, with total lending totalling 15% (c.£4.1 billion) of all commercial real estate loans. This is expected to double to 30% within the next five years.
Another interesting aspect of the report is the discussion of improving research methods and more analysable data. Trends and other data are becoming more comprehensive both in range and depth, allowing more efficient analysis and resultant transactions. Such developments can only be positive for both landlords and tenants, as well as agents and other real estate professionals.
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