The latest UK election results seem to have been a foregone conclusion, anticipated by markets which had already priced in the outcomes. This insight comes from a recent meeting of The Commercial Property Network investment panel, which consists of investment experts from independent commercial property firms across the UK. These experts provide a granular view from their respective geographic locations, giving us a unique vantage point on how the election results could influence the commercial property sector.
Market Reaction and Interest Rates
Initially, the reaction in the commercial property markets to the election results was positive, with markets ticking upwards. However, the panellists indicated that interest rates are a more significant driver of change in the commercial property market than the election results. The expectation of declining interest rates holds more weight for future market predictions. The sector keenly awaits the first budget post-election to understand the full implications better.
Construction and Interest Rate Concerns
Construction costs are neither rising nor falling; they maintain their high level, creating a static environment for new developments. Additionally, interest rates still influence financing options and investment decisions.
Stability and Investment
Political stability following the election is predicted to attract overseas investments. The panellists debated this aspect, noting that the UK’s stable political climate might be a new draw for foreign capital as the UK commercial property market once again becomes an attractive investment option.
Bank Lending and Investment Trends
Banks are still not under pressure to lend. However, the team is starting to see High Net Worth Individuals (HNWs) preparing to adjust their strategies, recognising that the era of high interest rates is likely ending, prompting a renewed interest in property investments despite the current lack of stock.
Investment Trends and Stock Availability
This shift mentioned above is prompting a renewed interest in property investments. However, a significant issue remains the lack of stock, which could pose a challenge if there is a sudden surge in investment in commercial property. This scarcity of available properties could become a critical bottleneck, potentially driving up prices and intensifying competition among investors.
Labour Costs and Future Concerns
A potential increase in labour costs was a concern, particularly under a Labour government, which could impact operational expenses and investment returns in the commercial property sector.
To sum up..
While the UK election results have provided some market optimism, the commercial property sector seems more influenced by economic factors such as interest rates and construction costs. The panel’s consensus suggests a cautious optimism, with a watchful eye on upcoming economic policies and their direct impact on investment and development within the sector. The accurate measure of the election’s impact will likely unfold in the coming months, particularly following the government’s first budget announcement, which will offer more precise signals on the economic direction and its implications for commercial property investment.