Investment in commercial real estate in the UK will grow by 30% in 2021. This forecast gives the world’s largest commercial real estate company – CBRE – in its report. The volume of investment in 2020 was £ 37 billion, and in 2021 it is expected to grow to £ 48 billion.
Despite all the problems associated with Brexit, CABE predicts that this factor will disappear very quickly as a source of uncertainty in 2021. After five years of disagreements, disputes with the European Union and uncertainty in all areas of business relations, a settled relationship will finally take shape.
Of course, COVID-19 will still have a strong effect on the economy at the beginning of the year, since the effects of mass vaccination will not appear until the summer. However, the deal concluded with the European Union on 24.12.2020 will bring certainty to the economy, politics, social life and including the real estate market.
Considering that bank rates are at record lows and the market is full of available real estate for investment, we should expect high interest in commercial real estate from various investment institutions.
In 2020, investors stayed away from the commercial rental market as the pandemic left many offices empty and tenant behavior unpredictable. The travel ban, social distancing rules, all made many types of commercial real estate unprofitable.
Now, investor cash is flowing into other areas that are benefiting from the pandemic-in particular, the logistics sector and long-term securities.
In 2021, as vaccination ramps up, the tensions associated with COVID-19 will subside and we will see stores, offices and restaurants recover.
The forecast for commercial property yields in London for 2021 is 2.6%. However, over the next five years, yields are expected to be 4.4% each year and rents will rise by 0.3% a year.