UK property investors can remain confident in the market despite geopolitical and economic disruptions, according to insights shared at our Fisher German’s Annual Property Briefing.
The event, chaired by James Routledge, Head of Investment at Fisher German, featured Jennifer McKeown, Chief Global Economist at Capital Economics, and Bill Page, Head of Real Estate Research at Legal & General. They discussed the impact of global tensions on investor decisions.
The speakers agreed that US President Donald Trump’s policies towards Ukraine and his threats of trade tariffs would undoubtedly affect many global economies in the short term, but they felt the UK would fare better in the long term.
Furthermore, rental growth driven by shifts in occupational demand and undersupply of new developments will be the key factor that determines investment returns, rather than yield compression.
Jennifer said: “While business sentiment has been damaged by the increase in national insurance contributions and minimum wage, as well as uncertainty surrounding US economic policy, there are reasons to be positive.
“The UK is likely to be relatively shielded from US tariffs given that, in contrast to the EU, it does not run a surplus in goods trade with the US. The UK economy is also particularly well-positioned to reap the productivity benefits of AI in future.
“Our forecasts suggest that inflation ought to be lower than many are expecting, causing interest rates to fall further than expected.
“With interest rates being a key factor in investor confidence, this could bode well for the UK property market.”
Bill then detailed the reasoning behind a predicted upturn in value and rental growth.
“The industrial and residential sectors are still good bets for growth, despite the global turmoil,” he said.
“Offices are not quite as strong for growth, but the gap has narrowed recently. What is clear is that higher-quality offices offer much better value for investors, while poorer-quality offices are due for more correction before becoming worth investing in.
“When it comes to ESG requirements, the evidence is clear that buildings with strong ratings are valued by the market, and green credentials are a key pillar of property investment decisions.
“A growing issue is around insurance premiums in the context of more frequent extreme weather events as a result of climate change, and whether the cost burden will ultimately fall on investors in the form of slower potential rental growth.”
James added: “The tone of the discussion was more positive than many were expecting. With Donald Trump seemingly changing the geopolitical landscape on a daily basis, many would think the resulting economic shockwaves would cause investors to lose confidence.
“Although these effects have caused short-term caution in the markets, it was encouraging to hear that the five-year outlook remains positive across various property investment sectors.”
“As always, Fisher German will closely monitor geopolitical and economic developments and their impact on market sentiment to provide the best possible advice to its investment clients.”
