Thursday, July 7, 2022

Germany set to topple the UK in commercial property

The UK is losing as commercial property investors flock Germany

With brexit approaching fast, British commercial brick and mortar is losing fast to that of Germany, as the EU country gets ready to claim the top spot in commercial property in Europe – a place erstwhile occupied by the UK. Germany is all set to topple the UK from the prime spot and sit at the top of commercial property market in Europe as the current patterns indicate.

These details were revealed in a survey of 3,500 international real estate investors by Brickvest, a property investment firm. The survey indicated that Germany is now the favourite destination for global property investors as brexit worries take ‘shape’. The survey found that one-third real estate investors are looking to back commercial deals in Germany. According to the online survey, the demand for London in commercial property has gone down to 27 per cent in the last quarter from 32 per cent a year ago.

So, brexit is showing its much-anticipated impact on the UK’s commercial property sector, considered a safe haven till now. As feared earlier, London risks losing thousands of jobs as a wave of relocation by corporations are on cards. These multinationals are planning to abandon the UK and move to the other side of the channel. Among the big names, are – Goldman Sachs, Deustche Bank, JP Morgan, Lloyd’s, HSBC, Morgan Stanley and Citigroup – which, practically cover the whole spectrum in the banking and financial sector. Among these, Deustche Bank, has already proceeded with its plans and leased premises in Frankfurt, Germany. Deustche Bank has said that it could relocate 4,000 jobs to its Frankfurt location. For the major corporations, along with these relocations, would come loss tens of thousands sackings in the UK.

The effect of warnings by top industry bosses that they are likely to axe tens of thousands of jobs in Britain following the country’s splits from the EU is now visible. On the contrary, research Capital Economics forecasts something different. The research firm expects UK commercial property to deliver total returns approaching 10 per cent this year. But Eduardo Gorab, property economist at the Capital Economics, said that with interest rates now seemingly on a gently rising trajectory, capital value growth and thus returns will moderate next year. Capital Economics expects returns to be between 4 per cent and 6 per cent during 2018 and 2021. He said that the expensive markets of London and South East will underperform.


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