This week global real estate consultant Knight Frank made its UK commercial real estate predictions for 2018.

 

Starting at the top, Alistair Elliott, Senior Partner and Group Chairman predicted and commented, "Whilst there will be much in the geo-political environment to pay attention to and the environment therefore uncertain, it is also the case that the pace of change has never been greater and the real estate markets never more dynamic. Looking at 2018 the main risks must be a significant shift in the UK administration, a negative shift in the Brexit process or some unforeseen global calamity.

 

"The challenges will be around the further weakening of the secondary retail markets, the pressing need to address the near desperate housing crisis which must be public sector led, much needed ongoing investment in infrastructure and the prospect of government taking an even more aggressive stance on the tax take in relation to real estate which must now be near a tipping point.

 

"Solid expectation remains across the UK for offices, logistics and the range of alternative sectors especially PRS. We predict that the ongoing change in work patterns and the attractiveness of mixed-use development will hand in hand present greater development opportunities for next year and into the future."

 

James Roberts, Knight Franks Chief Economist reports, "My tip for a contrarian investment in 2018 is Central London offices. At present, many investors are assuming a worst-case scenario on the impact of Brexit, largely based on the political instability in the UK. However, the political instability counts against a hard Brexit actually happening. There is not a Parliamentary majority for this, and there is a myriad of practical political and economic reasons why a hard Brexit is unlikely.

 

"This, in my opinion, increases the likelihood that the final deal with the EU is a political fudge, a Brexit in name only, which allows the banks to keep most of their operations in London. At this point - perhaps around Q3-Q4 of 2018 - we could see a surge in investor appetite for Central London offices."

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