UK Capital Markets H1 2019 Review & Outlook

Ongoing uncertainty around Brexit dampened UK commercial real estate transactional activity in Q2, with investment volumes slowing to £8.9bn, bringing the H1 total to £21.5bn. This represents a 22% decline on H1 2018 and was the slowest first half of the year since 2013, following a strong five years of investment volumes.

Despite the brief slowdown in activity, which sector continued to outperform, what were the biggest deals over the last six months, and which regions saw the highest levels of investment?  And considering all this, why does UK real estate remain highly attractive for global investors?

In this report JLL’s Capital Markets team analyse current investment trends and highlight key themes for the remainder of the year.  We also publish the results of our latest Investor Confidence Survey. Find out what the commercial real estate industry is expecting over the next 12 months, as well as views on the living sector, on the risks and opportunities in retail, and on the expected impact of Brexit.

Alistair Meadows, Head of UK Capital Markets:

“Transaction levels were notably lower in Q2, and we expect this to continue through at least Q3 as the political situation has put a brief pause on many investment decisions, as happened in the second half of 2016 following the EU referendum. Market fundamentals remain strong, with high levels of leasing, low vacancy rates and rental growth offering encouragement to investors.  The next development cycle appears to have begun, with many buyers circling value-add opportunities, and a specific focus on the looming supply gap in many major office markets.”

Jon Neale, Head of UK Research:

“The political uncertainty is undoubtedly having an effect on investor sentiment and market activity, but the UK’s attractions remained broadly undimmed. Investors have significant amounts of capital to invest, and the UK remains a major target, but the majority are waiting for some clarity over Brexit