Slower growth in 2018 but commercial market remains firm
Slower growth in 2018 but commercial market remains firm

Simon Rubinsohn

Chief Economist (RICS)

The economy ended 2017 on a relatively firm note if the prelimary estimate for GDP covering the final three months of the year is to be believed.

Banking

However, it remains to be seen whether this more positive trend can be sustained over the coming months with most forecasts still pointing towards a more anaemic performance as households continue to grapple with a squeeze on their purchasing power.

For the time being, the Bank of England appears in no rush to add to the first hike in interest rates in a decade that it sanctioned in November and this is also reflected in the perception of money markets.

This backdrop remains broadly support for commercial real estate although both the feedback to our survey and most other insight suggests the investment side of the market is holding up better than the occupier side.

The industrial segment, not surprisingly, continues to lead the way with robust rental and capital value gains projected for the coming year. The outlook for residential property is more mixed with a significant regional divergence; London and the South East continue to face a more challenging environment.

Finally, recent official construction data has been quite volatile making it difficult to draw a clear picture as to the underlying trend. For the record, the just released RICS Q4 Construction Market Survey results are still consistent with an increase in workloads through 2018 despite financial constraints and skill shortages.

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