The British Property Federation has urged the government to safeguard against a downturn in UK commercial property, as a major survey uncovered a slump in investor sentiment.
The BPF, a lobbying organisation for the UK commercial property industry, called on British politicians to consider a raft of policy measures to prevent the real estate market from dragging the UK economy down with it.
The organisation cited today’s survey by the Royal Institution of Chartered Surveyors (RICS), which uncovered sharp falls in investment demand and discovered that more than one-third of investors believed the market was at the early stage of a downturn. The finding rose to 54% for London specifically.
Ian Fletcher, director of policy at the BPF, said: “Commercial property investment is not always an obvious priority for governments because its social and economic impacts are indirect, but construction and development activity flow from it, ultimately impacting on jobs and economic growth.”
The BPF is urging the government to monitor the situation in the market closely and consider a number of measures, including the introduction of various forms of tax relief for the build-to-rent residential sector.
It is also asked politicians to “maintain an absolute and continued commitment” to major infrastructure projects, such as HS2, Crossrail 2 and airport expansion.
“This is not the time for knee-jerk reactions, but commercial property and a number of the government’s priorities are interdependent,” Fletcher said.
“Ministers must closely monitor developments in the commercial property market and be ready to act in weeks, not months, if evidence continues of a slowdown in investment.”
According to the RICS survey, investment enquiries fell sharply during the second quarter of the year across the UK with the net balance falling to -16%, following a positive 25% in Q1.
“All sectors covered by the survey suffered a drop in investor demand and foreign investor appetite declined at an even faster rate with 27% more respondents to the survey seeing a drop in interest,” RICS said.
“The fall was most pronounced in London with the investment enquires indicator posting the lowest reading since 2009.”