Although investors in the UK property market will still be able to find both exciting and challenging options throughout 2015, forecasters nevertheless believe the general outlook for the year ahead looks to be set fair with growth in real estate markets easing back to more realistic and sustainable levels.
This year's two major variables will, of course, be the general election and the timetabling of the long-anticipated increase in interest rates, either of which could substantially influence trends.
Prospects for London
According to Savills, London's strong rental recovery is considered likely to continue without interruption in view of limited availability. Meanwhile, given that values still appear relatively low, overseas investors are expected to seek out the City's premium quality stock with the same enthusiasm as they did in 2014.
An RBS report points to central London retail top performing once again with a growth prediction of 18 per cent, whilst elsewhere, West-end submarkets, presently short of new-build office stock, will thus see a similarly strong demand.
Regional trends
Commercial real estate advisors CBRE anticipate rising confidence and investor interest will drive regional growth in the year ahead.
Commentators have noted the ripple effect, apparent during 2014, which resulted in 21.4 billion of asset purchases outside London, the highest proportion recorded since 2006, and believe this non-London activity demonstrates the regional recovery is well under way and will gather further momentum through 2015.
Supporting these assertions, office take-up also grew 11 per cent (2014) in prime regional locations – identified as Birmingham, Bristol, Cambridge, Cardiff, Edinburgh, Glasgow, Leeds, Manchester plus the M25 – and the sector is predicted to prosper in similar fashion this year.
Retail recovery
Retail markets are widely forecast to move into a stronger recovery cycle alongside a gradual rise in disposable incomes.
Locally, the detail will still be influenced by housing market trends, though overall the DIY sector, for example, should see sales increase by around 5 per cent over the year.
Such news augurs well for online suppliers who are well-represented in this field, and will in turn help to fuel a demand for super-efficient retail warehouse parks.
Well-established retail shopping centres are also expected to benefit from a sustained upturn, as are many high street locations.
Those who remain slightly pessimistic about future retail prospects in the light of strong online competition could perhaps research the logistics sector, where 2014 results show the majority of the take-up was actually shared between manufacturers (29%) and retailers (49%). Logistics hubs, by their nature, are location-dependent with prime sites occupying central positions in the UK and along the M25 corridor.
Summary
Reflecting on the broader prospects for the year, CBRE's (UK) head of research Miles Gibson acknowledged the trend for 'property investors (to) shift from London out to the regions' and also noted the significance of falling oil prices, saying:
‘The likely effects of pushing down inflation and boosting consumer spending, means we should expect to see a knock-on benefit for retailers, which in turn could stimulate growth in the retail property sector. Although there are positive signals for the property market, we recognise that there will be uncertainty caused by the imminent general election. The combination of these trends makes 2015 an intriguing prospect for the sector.'