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Although 2010 will be a “boom year” for property investment in the U.K., it could lead to sharp declines by 2012, consultancy King Sturge warns in its latest report.
“There are clear signs the property investment market has started to recover,” the firm reports. But a wide variety of economic factors could create a “false dawn” and the “collapse” of capital values by 2012, King Sturge forecasts.
“All commercial occupational markets across Europe will remain soft” for two to five years and “rents will continue to fall,” the firms predicts. “In the office market the worst rental falls will be in Germany, Ireland and Spain,” King Sturge writes. “In the industrial market Spain and Hungary will do particularly badly.”
The report also notes that “lack of demand for space in both the private and public sectors AND falling rents will result in very few new development projects for two to five years.”
On the residential side, average house prices in the U.K. will see “very modest decreases in value,” according to the report, which puts King Sturge vaguely in line with other predictions. The pound is likely to remain weak, which should support “continued inward investment from European and Asian buyers.”
“The question for overseas buyers is: ‘is Sterling going to start a fight back?’ If it does, interest in London property markets may be more limited.”
King Sturge also sticks a pin in the U.K. green bubble. “Urban regeneration and eco-towns will be a non-starter” in most markets, with land values “below water.”
For more recent reports, check out the IPJ Research section.
