Investment in the property sector is slowing in the run up to the referendum on Britain’s membership of the European Union.
But, according to one expert, it will bounce back after June 23, if the country votes to stay in.
Nigel Almond, research director at property firm Cushman & Wakefield, was speaking at a breakfast event about the outlook for the sector.
“We are definitely seeing an investment slowdown with a lot of people sitting on their hands until the outcome of the EU referendum,” he said.
“However, we are predicting a stronger period of economic activity and investment volume in the second half of 2016 and another above-average year for UK investment in the regions.
“In terms of return on investment, we are predicting single digit returns over the next three years, with rental growth and income remaining flat and a little bit of negative yield impact on prime property from 2018. Secondary yields are looking a bit stronger, with greater confidence in occupier markets and overall returns of up to 10 per cent in 2016.”
In Bristol, Grade A office take-up, with 200,000 sq ft in the first quarter of 2016, has put severe pressure on the development pipeline.
And that is predicted to fuel a strong period of rental growth over the remainder of the year and into 2017.
As the fastest growing European city outside London for hi-tech businesses, there was also a recognition of the resurgence in city centre living, with around 850 residential units in planning or construction in the private rented sector and key developments coming forward for schemes such as Redcliffe Quarter.
Cushman & Wakefield’s Bristol-based investment and development director, Nick Allan, said that investment transactions across the region, including the £34.1million acquisition of 2 Temple Back East – pictured top – by Ardstone Capital, were 220 per cent up in 2015.
He highlighted key projects like the Bristol Arena, continued progress around the Enterprise Zone and the £200 million Metrobus system as providing added impetus to the city’s redevelopment.
The job facing Bristol’s incoming mayor was also a hot topic within the panel debate, chaired by the head of Cushman & Wakefield’s Bristol office Tim Davis.
The majority of panellists welcomed the “committee approach” adopted by new mayor Marvin Rees but called for prompt action on addressing the city’s housing shortage and formalising the City Region deal, as well as a more bullish approach to telling the ‘Bristol story’ to potential investors and occupiers at home and abroad.
Rorie Henderson from Salmon Harvester, whose joint venture with NFU Mutual is developing prime office schemes at Glass Wharf, said: “[Former mayor] George Ferguson was a breath of fresh air for Bristol and we’ve certainly found it a good place to do business.
“The combination of our location and the attractiveness of the market for investment made Bristol a fairly simple choice.
“We did end up developing one of our schemes speculatively after pre-let talks stalled with AXA and that looks like being a good decision at the moment.”
James Durie, director of Bristol Chamber of Commerce & Initiative, suggested that although the new mayor has gathered a strong team around him, he needs to make some tough decisions quickly and work closely with the private sector to develop a strong vision for the city.
He said: “There are some really good projects coming forward in Bristol and the wider city region but my main concern is that we need to do a lot more to understand what employment sites we are going to need in 10 years’ time, so that we can ensure that we deliver the right infrastructure and housing development to support them.
“£900 million [of City Deal funding] may sound like a lot and it will provide an element of security but we need to use this to leverage more investment if we are to deliver sustained growth for the region.”
SOURCE: SouthwestBusiness.co.uk
