The UK’s commerical real estate market is anticipating a short-term improvement in sentiment and investment activity after the Conservative Party won an overwhelming majority in the general election, but many fund managers remain concerned about the prospects beyond 2020.

“A Tory majority is the most positive or benign outcome for business and the real estate market,” said Rob Wilkinson, CEO of AEW.

“But I don’t think this is going to lead to any sudden euphoria or an investment spree into the UK. Critical uncertainties will still remain, particularly around whether they can get Brexit done by 31 January and a deal struck by the end of next year.”

James Thornton, CEO of Mayfair Capital, agreed: “The resounding Conservative win removes the short-term risk of a no-deal Brexit and the fog of political uncertainty – although the medium-term risk of the UK crashing out of the EU remains.”

However, he said he expected to “see greater public spending announced in the New Year, which would include additional infrastructure funding, one of our core investment themes”.

Thornton added: “We also expect higher GDP growth and continued high employment. All of these factors will support occupier demand and improve real estate investment liquidity.

“We do not believe that higher sterling will deter foreign investors who have been more concerned by the political uncertainty. Ultimately property returns are correlated with economic growth. The removal of one risk factor should enable confidence to return leading to stronger growth.”

Zachary Gauge, European real estate analyst at UBS-AM Real Estate and Private Markets, said: ”The comprehensive majority won by the Conservatives should finally give the UK real estate market some clarity.

“Investment activity in 2019 has been held back by the ongoing uncertainty, but we would expect to see some of the foreign capital which had been understandably waiting on the sidelines to start to target the UK again in the first half of 2020.

“This may provide a short-term bounce, particularly in central London, which appears attractively priced compared to other European markets.

“But the clock will start ticking very quickly towards end-2020 when the transition period comes to an end and based on the experience of the previous three and a half years it’s very difficult to see how all the details of the future trading arrangements can be tied up within 11 months.

“So it may not be long until uncertainty returns to dampen the market. Economic growth is also expected to be subdued as businesses will still lack the clarity which is required to make long-term investment decisions in the UK until all those finer details are tied up.

Marc Gilbard, CEO of Moorfield Group, described the election result as “a huge fillip for UK-focused real estate investors”.

He said: “The socialist agenda that threatened material amounts of financial pain across many real estate fronts has thankfully been retired by the public vote.

“The short-term euphoria however can’t paper over the cracks. There are still some unanswered and critical questions, such as: when will Brexit actually be achieved; what will the trade agreements with the EU and other countries be; how will the resurgence of the SNP be tackled; and, of course, where exactly are we in the economic cycle?

“For the real estate sector specifically, the challenge continues to be how it reacts to and manages the ongoing disruption impacting every sector, but especially retail.

“We are seeing seismic shifts, driven by permanent and structural societal change, and investment strategies are being shaped accordingly.”

Jessica Berney, fund manager of Schroder Real Estate Fund, said: “We expect that the commercial real estate market in the UK will remain strong in 2020, despite some investor and occupier hesitancy as a result of Brexit and the slowdown in economic activity.

She added: “The possibility of a Brexit deal in the new year could trigger a new inflow of foreign capital, particularly into the London office where yields remain higher than Paris and Berlin. Meanwhile, the weakness of sterling may also attract investors from the likes of South Korea, Japan and the Middle East in particular.”