1. Property trends seminar economic & property market Overview Steve mallen march 28th 2017

2. contents
Economic Issues
Property Market Trends
Observations

3. Economic Issues

4. The times they are a changing…….

5. ……..and policy is shifting…….

6. Uk Quarterly GDP (1955 to 2016) %
The economy is much less volatile than it was….even if it doesn’t always feel like it….
Source: ONS

7. Uk GDP Per Quarter (2011 to 2016) % Eurozone currency & debt crisis
Brexit Fears Unsettle Markets
Source: ONS

8. UK GDp Forecasts %
A return to optimism ?
Source: Bank of England

9. Euro Sterling exchange rate
Euro declines as EU economies struggle
Euro surges in the wake of Brexit
Source: European Central Bank

10. Energy & food prices driving up inflation into “explanation” territory
Inflation (CPI) %
Energy & food prices driving up inflation into “explanation” territory
Prices are now rising faster than earnings……
Source: ONS

11. ECONOMIC PRODUCTIVITY
GVA Growth (Year to Q3 2016)
Top Ten UK Cities
Projected GVA Growth (2017)
Top Ten UK Cities
Source: CEBR/Irwin Mitchell
The Bidwells region and the Golden Triangle contain many of the UK’s most productive centres

12. Property market trends

13. Commercial property total returns%
Forecast
Brexit undermines market confidence……but performance expected to improve gradually
Source: IPD/MSCI/IPF

14. UK commercial property risk & return
UK property has offered progressively higher risk adjusted returns against a backdrop of lower volatility and less risk
Source: IPD/MSCI/IPF
The Sharpe Ratio = The average return earned in excess of the risk-free rate per unit of volatility or total risk. The Higher the ratio, the better the risk-adjusted return.
Standard Deviation = The degree of variance in performance over time as a proxy for market volatility. The lower the deviation, the less volatile and hence less risky the market.

15. UK Investment funds – Net retail sales
Investment fund market completely “spooked” by Brexit, but has recovered….
Source: Investment Managers Association

16. Net retail sales of uk domiciled property funds
£ millions
Market uncertain and confused
Brexit prompts a stampede for the doors in UK property funds
Source: Investment Managers Association

17. UK Farmland prices (£/Acre)
50 year Bull-run on UK farmland prices stalls with Brexit fears
Source: Financial Times

18. UK Housing Transactions
Housing market impacted by a tax reform and Brexit rollercoaster with transaction volumes subsequently stabilising at historically low levels
Source: Land Registry/ONS

19. The housing market challenge
Residential planning approvals have risen sharply in response to planning reform and positive pricing
And yet housing completions remain stubbornly low, supporting gravity-defying price and affordability ratios

20. Uk Construction Index
Construction sector confidence and activity plummets around Brexit but has recovered to a marginally positive position
Growth
Contraction
Source: Markit/CIPS UK Construction PMI

21. Digital & technology gva (2016)
£30bn
In 2016, the UK secured £6.8bn in venture and private equity investment – 50% more than any other European nation
£5.5bn
Digital and technology output is rising at 10% pa and exceeded £100bn in There are now 1.7 million people employed in this sector and 70% of the growth is taking place outside London
Source: Tech City
£million
Client name - Document title

22. observations

23. Holding our breath…….

24. Observations Change has created confusion, uncertainty and division
BUT
The economy remains in good shape with forecasts improving
Although inflation and exchange rate pressures will temper growth
Property market confidence has stalled but is recovering
Investment fundamentals remain positive in all sectors
Construction sector has headwinds and tailwinds
Post-Brexit growth will focus on key east and south UK centres
Golden Triangle prospects are especially strong
And Brexit will take many years to resolve……
………and you can’t hold your breath forever !