London

The UK Economy and to the same extent the property market continues to demonstrate robust growth, a trend experienced since the Brexit vote last Summer.

The checks and balances in place in many western world markets are showing through in the US, with the Trump administration being constrained in some of the more controversial policies they are looking to introduce.  The administration and their policies are proving positive for corporate/global growth and interest rates are rising in the US as a result.

The picture is somewhat different in the UK, with Article 50 now triggered and an election called, it is to some extent and “wait and see” approach while negotiations over the UK’s exit from the EU play out.  Despite this, the UK economy grew by 1.8% in 2016 (beyond forecasters expectations), 40% of that growth in the last 3 quarters of the year.  The robust economic growth has been fuelled by consumer spending, however with inflation growing and the savings ratio falling to its lowest level since the 1960’s, the sustainability of this growth is questionable.

The property market continues attract investor interest particularly given the low interest rate environment.  The structural changes that are taking place in the economy are reflective of investors’ appetite for different parts of the property sector and the view across sectors is mixed.

The retail sector remains challenging, with larger retailers continuing to struggle, but smaller retailers seeing consistent growth driven by consumers’ spending appetite (albeit this is expected to slow). The industrial sector is perhaps the biggest winner, with structural changes in the retailing sector continuing to benefit the logistics sector, whilst the wider industrial market continues to benefit from constrained supply and a buoyant manufacturing sector fuelled by the weak Sterling.

The low transaction volume and continued investor appetite for property, makes it feel like a seller’s market, but the continued structural changes taking place and robust occupational growth are presenting inefficiencies and potential opportunities to capitalise on this.  The market for long dated income remains very much in demand from investors looking for a decent return with minimal management.

Comments by:  James Wakelin, C2 Capital
Date:  15th May 2017