The unexpected political events of 2016 including Brexit and the US Presidential election outcome will lead to greater ‘caution and risk aversion’ among property investors in 2017, making secure income streams more highly valued amongst investors globally, according to Savills.
Savills believes that this trend will benefit the UK market, where high levels of transparency and stable legal structures make property a safe haven.
The property market in the UK will remain at its current steady state, with average UK house prices expected to remain stagnant in 2017. It is predicted that there will be an increase by 2% in 2018 and 5.5% in 2019 to a total of 13% by 2021. A supply-demand imbalance means rents will outperform house price growth, rising 19% over the same period.
In the commercial market, average total returns on UK property investments are likely to be approximately 5.6% per annum during 2017-2021, with a 1.6% five year capital growth forecast for office values and a 4.4% growth forecast for office income returns.
It is expected that commercial property assets with long lease structures and strong rental covenants will continue to attract attention, while institutional investor appetite for large residential portfolios is predicted to grow continuously. The high yields and strong income flow from properties in Leeds will attract strong demand from investors.
Mark Ridley, Chief Executive Officer of Savills UK and Europe, said: “Expect the unexpected” is now the normality, not the exception, on the world stage. Despite this, property remains a fundamentally safe asset class, giving strong income returns and, in many cases, is a refuge for capital preservation in the longer term, its appeal remaining resolute.”
Let Leeds looks forward to 2017 and wishes all customers a prosperous new year.