There are plenty of reasons to be optimistic about the year ahead and not worry about a downturn which may not happen until 2021, according to CBRE.
‘We are quite optimistic about Europe in 2019, there is nothing to inspire pessimism or fear,’ Neil Blake, EMEA chief economist and global head of forecasting, CBRE, told Real Estate Day. ‘The concerns are overdone because the fundamentals are good and the markets are still flying.’
The economy has slowed down and there are political challenges, but ‘there are a lot of investors around, the occupier markets are doing well, employment is still growing and rents are picking up. No one ever mentions lack of investment demand and there is plenty of money looking for a place to go. We are optimistic that the cycle will not end soon and we will not see a slowdown next year. The downturn may happen in 2020 or 2021’.
Considering the levels of concern over Brexit, ‘UK offices have done better than most people predicted,’ said Blake. ‘In Central London there has been a massive amount of new supply, most of which has been taken up. Rents have held up and there is no shortage of tenants. Regional offices have done better than London.’
Looking ahead, in 2019 vacancies may increase due to more supply coming to the market and rents are likely to go sideways, he said.
Logistics also had ‘a cracking year’ in 2018 and it looks set to continue on an upward trend this year. On the negative side, the retail sector is experiencing difficulties, Blake said, as it is ‘caught in the perfect storm of e-commerce growth, reduced spending power and changing consumer habits’.
But difficulties throw up opportunities: ‘There are some worthwhile investments out there in the retail sector,’ he said. ‘More transparency on the sector in 2019 would help us identify them.’
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