CBRE: Real estate investment to recover in 2021

Commercial real estate investment will increase by 30% in 2021, CBRE’s 2021 UK Real Estate Market Outlook forecast.

Investment is expected to total £37bn in 2020, which should rise to £48bn in 2021.

Despite the current challenges of Brexit, CBRE predicted that it will rapidly fall away as the biggest source of change and uncertainty for real estate in 2021.

Miles Gibson, executive director, UK Research, and the editor of the report, said: “Deal or no deal, 2021 will find us in a settled new relationship with the European Union, after five years of debate, division and uncertainty.

“We will not quite have left the COVID-19 winter behind, but the shape of that exit will be much clearer. Brexit will rapidly recede into the background as a pre-occupation, as new issues emerge for UK economics, politics, society and real estate.”

CBRE added that long-term interest rates are at record lows and there is an abundance of capital looking for a return, which will help to support a recovery in commercial property investment.

Steven Newlands, executive director in CBRE’s Investment team, said: “Investors have held off from UK property investment recently partly because of pandemic-related disruption and the potential for it to induce changes in occupier behaviour.

“Travel bans and guidelines around social distancing also have also meant investors haven’t been able to view some properties.

“These concerns, as well as the restrictions, will ease over time for some asset types as the occupier market recovers.

“For now, investors are focusing on the winners from the pandemic: the logistics sector and other sectors with safer, long-term incomes.

“For 2021 we expect this to continue as we return to near normal conditions as the vaccine is rolled out.”

CBRE forecasted typical property returns of -4.4% for 2020, but 2.6% for 2021, assuming a Brexit deal is done.

Over the next five years CBRE has predicted average returns of 4.4% per year with rental growth of 0.3% per year.