UK lenders predict fall in commercial property values in 2019

Lenders active in the UK real estate market believe commercial property prices will fall this year due mainly to political uncertainty, according to the latest Real Estate Market Trend Analysis report from Link Asset Services.

The survey, which collected data from 100 respondents, from 81 separate lenders, revealed that three-quarters of lenders expect UK commercial property values to fall more than 2.5% in 2019. Only 8% expect commercial property values to rise during the period, the report said.

The majority (74%) of the respondents cite UK political risk as the biggest threat to the commercial real estate market in the coming year. Among those citing political risks, Brexit was the largest concern (51%) followed by a change of government (14%) and general political risks (9%).

The report, which analyses the UK’s largest dataset of lenders’ sentiment regarding real estate, also revealed that the number expecting loan volumes to increase in 2019 fell by 18% from last year, and the number expecting to increase the size of their origination teams fell by 10%.

James Wright, the head of real estate finance at Link Asset Services said Brexit has “already weighed heavily” on UK real estate market, and political risk is by far lenders’ largest concern.

“We are seeing many taking a far more cautious approach as a result, with fewer expecting to do more business, and many falling back into their core markets and products.

“It looks like, in the next 12 months, we’ll see lenders take a ‘softly, softly’ approach until there is greater clarity around the UK’s relationship with the EU, and economic and political fears calm.”

The research is based on the collection of primary data over the first two months of 2019.

 

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