In a recent report, it was mentioned that the U.K. commercial property market needs to be closely monitored as it is speculated to overheat amidst concerns that it doesn't look promising in the near future.
In addition a previou report ran in WJS, the prime real estate central London may not be in a bubble yet but with foreign investors said to be cashing out there are concerns that economic catastrophe may just be around the corner. At that time, analysts and real estate agents are said to be convinced that prices in prime London are likely to fall by at least 2 percent by the end of the year.
But according to FT, there has been has been a sudden in surge of investments that drove investment levels in the UK commercial real estate market to hit peak levels this year. Contrary to what analysts have predicted as mentioned above, CBRE rather foresees that the prices in the UK real estate market would stay relatively high in the years to come. Therefore this LA-based firm most likely does not believe that the prices in prime London could decrease by 2 percent at the end of the year.
However CBRE notes that with rental growth diminishing, total returns may begin to decline after four years. Speaking of the prices in UK commercial real estate, FT quotes what CBRE chief executive Bob Sulentic remarked, "Pricing has gotten very high but there's a reason it has gotten high . . . and we think it can stay high. There's a wall of capital out there that wants to be invested in real estate."
Moreover CBRE has also reportedly mentioned that London is more inclined to get ahead of other European markets in terms of the cycle of investment volumes. Analysts at CBRE said that the UK market may be currently at its peak in the present investment volume cycle and it is a little higher than the last cyclical peak of roughly £62 billion in 2006. The same level of investment volumes is expected to happen in the next two years.
Based on another report in Property Wire, investment volumes in UK commercial real estate are expected to exceed £70 billion in 2015, and it was said that if it does, it is going to be the highest on record. With this report from FT, the investment levels reported by CBRE may be short of that forecasted amount but it appears that the UK commercial real estate still has hit the highest peak in history.
