The UK economy will most likely avoid a technical recession this year, contrary to some other European countries, as household spending is holding up relatively well thanks to a healthy labour market. However, the commercial property market has had a subdued year so far, with investment volumes standing at £28bn in the first eight months of 2019, down by almost a third from the same period in 2018.
Our forecasts suggest that returns will turn negative this year for the first time since 2008 as rental performance and pricing concerns in the retail sector are driving increases in yields. All property returns are predicted to fall by 2.6% this year, with some retail segments projected to experience double-digit declines. However, we expect the market to bottom out this year and over the five-year horizon until 2023, we predict all-property annual average returns of