Via Scott Wright
According to a new estimate, the logistics and residential sectors of the property market in Scotland would “dramatically outperform” in 2021, when, after five volatile years, Brexit will rapidly fade as the main problem.
During Brexit, the drastic move to online shopping has led investors flocking to put their money into real estate in the logistics industry.
The real estate company CBRE expects this development to continue next year, forecasting that funds for investing in additional warehouse space will be available in Scotland.
The pandemic has underscored the vital role of the logistics sector in keeping products flowing, according to CBRE. In order to protect against potential disruptions, the business expects consumers to concentrate on creating more resilient supply chains, growing capacity and diversifying suppliers in the coming year.
In Scotland, £ 174 million has been invested in industrial and logistics real estate so far this year, according to CBRE. Although this is down from the £ 185 million spent last year, it is estimated that the amount will hit £ 200 million on a five-year average by 2020, taking into account the deals expected to close by the end of the year.
We expect 2021 to be another strong year for our market in Scotland. David Reid, associate director of the industrial and logistics team of CBRE Scotland, said, “We expect 2021 to be another strong year for our market in Scotland. The incredible take-up of space in 2020 has resulted in critically low levels of stock and, with demand remaining strong, we urgently need new speculative developments to meet future occupier requirements. We are working with a number of developers to fill this gap in supply.”
CBRE’s 2021 UK Real Estate Market Outlook predicts that next year the logistics and residential sectors will achieve substantial growth, although it states that lower or even negative rental growth will result from a weaker economy.
The broker says overall investment in property in Scotland has declined by around 50 percent this year so far, falling to £ 1.06 billion from £ 1.99 billion in 2019, in the midst of continuing Brexit turmoil. Investment is, however, projected to grow to £ 1.5 billion next year, taking it closer to the £ 2.1 billion five-year average.
Demand is expected to come from a variety of sources, including sovereign wealth funds, overseas institutions and European funds, said Steven Newlands, executive director of the investment team of CBRE. Overseas private investors are also expected to be especially involved. “Demand is expected to come from a variety of sources, including sovereign wealth funds, overseas institutions and European funds. Overseas private investors are also expected to be particularly active. ” Once the vaccine is rolled out, we expect this to continue through 2021.
The report points to expectations of a gradual improvement in the office sector, and after a tough start to the year, investment and take-up are expected to recover gradually. CBRE reports that UK office yields will remain stable, while in 2020 and 2021 capital prices are expected to decline by about 11 percent.
Although considerable question exists as to whether the United Kingdom and the European Union will settle on a trade deal by Dec. 31, CBRE expects the Brexit problem to gradually fade. Given record low interest rates and a “abundance of capital looking for yield,” the company expects the commercial real estate investment market to rebound next year. The market has slowed this year in the midst of pandemic-related uncertainty.
“CBRE praised the housing market’s resilience and expects it to perform strongly in 2021, supported by “tax incentives, strong demand and restricted supply.” Mr. Newlands said, “Investment in the housing sector was strong in 2020 amid Covid 19 restrictions. The build-to-rent sector is aimed at a high level of equity, and lending still remains very competitive.
Miller Mathieson, CBRE Schottla’s Managing Director