United Kingdom Real Estate Report 2016
BMI View: With economic growth broadening out to the UK regions, we expect rental rates to grow acrossall three commercial real estate market sub-sectors we cover in 2016. Investors' desire to capture growthand secure higher returns should keep demand for property in which to invest high. There are stillopportunities to take on development risk in the regions and suburban London.
UK economic growth slowed slightly in Q315, expanding by 0.5%, down from 0.7% in Q215. Acontraction in manufacturing and construction output was the main factor in this slower growth. Meanwhile,the services sector has continued to be the key driver of economic expansion. Business confidence hasincreased following the decisive outcome in the May 2015 general election, ending months of uncertainty.
0Consumer confidence is also improving, and with unemployment continuing to trend down and inflation atzero, consumer spending has been rising. Overall, therefore, the economy looks set to post a solidperformance in 2015 as a whole, with BMI forecasting growth of 2.4%. Through to 2019 we expect annualgrowth to average 2.4%. That said, there are downside risks to this forecast. With the Chinese economyslowing and a flurry of weak international data, the world economy seems to be losing momentum and thiscould hold back export growth and cut business investment in the UK.
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