UK Property Market’s Post-Brexit Boom

The UK’s successful exit from the European Union with a historic trade deal in addition to being one of the leaders in the global roll-out of the COVID-19 vaccinations, analysts are predicting a strong rebound for the UK property market in 2021, despite the UK being in its third national lockdown.

As the UK’s vaccination programme is on target and the issues surrounding the supply of vaccines being resolved in January 2021, economists expect an acceleration of growth in the second half of 2021.

Brexit has caused disruption to the UK market since the 2016 referendum due to political and economic uncertainty, which is no longer there following the trade agreement signed in December 2020. Miles Gibson, executive director of U.K. research for CBRE said “The UK’s "settled new relationship" with Europe, plus low interest rates, will drive an uptick in commercial real-estate investment”. CBRE forecasts £48 billion of investment in 2021, an increase of £37 billion from 2020, approximately 30%. Colliers International predict a 36% acceleration in commercial property investment.

There were signs of a bounce back in the second half of 2020, with £5 billion spent by investors on London offices according to Avison Young. Sun Venture, a Singaporean investment firm acquired 1&2 New Ludgate in The City of London, a transaction worth £552 million in London’s historical financial district.

Work on Derwent London’s £400 million office development in London’s West End will commence later this year. Derwent London’s Chief Executive, Paul Williams, envisages a two-tier office market will emerge post COVID. Workers have adapted well to working from home, which will continue, however, companies will still invest in  "long life loose fit" office space with net-zero carbon with plenty of amenities including on-site gyms, coffee shops and roof terraces for their staff. "Our vacancy rates are very low," he said. "People want to congregate if they can."

Knight Frank also predict offices with fewer people, but note that each employee will require more space, "I think as a result most organizations will make some degree of space saving, but it’s going to be fractional. Maybe it will be five or 10%." said Stephen Clifton, Head of Commercial at Knight Frank.

Industry analysts foresee the logistics and multi-family sectors to be the top performers this year, with a boost from online shopping and housing demand.

With overseas travel becoming more expensive with the addition of quarantine in hotels and COVID tests for certain destinations, the UK leisure and hotel sector, especially in the coastal and countryside locations will lead the recovery of the hospitality sector, which saw a 70% decrease in investment in 2020, according to Henry Jackson, a partner in Knight Frank’s hotel team, who commented “Business travel is still sluggish, but hotels will benefit from the pent-up demand from the staycation market". The UK’s population is 66.65 million and there are around 15,000 hotels.

The £1.3 billion overhaul of the Olympia Exhibition Centre in West London is one of London’s largest real estate projects by Yoo Capital and Germany’s Deutsche Finance International. The new centre will include a 4,400-person capacity live-music venue that will be run by Los Angeles-based AEG Presents, the promoter of California’s Coachella music and arts festival. Olympia will also benefit from hotels managed by Hyatt Regency and the Dutch boutique brand citizenM. "History tells us that post-wars and -pandemics, people are social animals and quickly return to all the activities that support human society," said John Hitchcox, chairman of Yoo Capital. "People are longing to get back to normal."

Annual house price growth rose to a six year high of 7.3% at the end of 2020 despite the economic uncertainty; therefore, we encourage investors to act early to benefit from the property boom that we are expecting in 2021. To receive personalised property investment recommendations, please fill out our quick and easy 60 second investor form today.