UK transactions fall by 18% as investors approach Brexit with caution - C&W

Real estate transactions in the UK fell by 18% in 2018 as investors held back or sold their assets in anticipation of Brexit, according to analysis by Cushman & Wakefield.

The final quarter brought a 43% drop in investment volumes against the same period in 2017, with £12.8 bn (€14.7 bn) worth of transactions, bringing the full-year total to £55.8 bn (€64 bn). C&W said the figures were ahead of the long-term averages of £10.5 bn for the quarter and £42 bn for the year.

Trading across Central London was just 4% down from 2017 to 2018 at £20.6 bn, with activity in the City up by a marginal 1%. Outside London activity fell by 25%, partly because of a fall-off in portfolio sales.

Activity was down in most sectors, with logistics dropping by 40% to £7.9 bn while retail investment fell by 23%, driven by a 27% fall in retail park sales. Hotels and residential were broadly stable, reflecting sustained demand.

C&W said the gap between prime and secondary yields narrowed over the quarter, but it expects the gap to stabilise or even widen during 2019 as political uncertainty continues.

Dr Nigel Almond, head of data analytics – EMEA research, said: 'The ongoing uncertainty surrounding the UK’s exit from the EU is causing caution among some investors either seeking to sell or acquire assets. Baseline predictions suggest weak or negligible growth for several quarters in the event of a no-deal Brexit but the wide variation in forecasts underlines the uncertainty in the market.

'With a gap emerging between buyer and seller expectations on pricing amid continued uncertainty, deals are taking longer to close, with many investors unwilling to sell at lower prices or holding off from bringing assets to the market, despite there being active demand.

'Pricing is expected to stabilise with softening in some segments, as activity is expected to remain weak in the first half of this year although we could see a positive upswing if greater clarity emerges on Brexit.'


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