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London

As the economy returns to pre-recession levels, commercial property values remain significantly below their peak

According to JLL’s latest UK commercial property forecast


London, 13th June, 2014 - UK GDP is on course to reach pre-recession levels in the second quarter of this year, however UK commercial property market values remain a long way below 2008 boom levels with the gap especially wide in markets outside of London according to JLL’s latest UK commercial property forecast.
 
According to JLL’s latest forecast, all-property capital values are expected to increase by 8.1 percent this year, which leaves values still 24 percent below peak by the end of the 2014. The forecast also reveals that 2014 will see the strongest capital growth, driven by substantial yield compression. However, as yield movement reverses direction towards the end of the forecast period, increase in property values will be minimal, with growth slowing annually until it reaches an estimated 1.3 percent in 2018.
 
FIGURE: IPD UK property values remain significantly below peak
 
Mark Jones, Director of Strategic Asset Management at JLL, said: “Despite the good news that the economy has returned to pre-recession levels, this contrasts starkly with recovery in commercial property markets. Our forecasts for the IPD all-property index show all-property values still one quarter below their previous peak even after a strong 2013 and further capital growth this year.”
 
Andrew Burrell, Head of EMEA Forecasting at JLL, added: “There has been considerable comment about a potential overheating of property markets of late. But with the exception of the top slice of the London office and retail markets, the figures do not bear this out. The UK recovery is encouraging and in our view sustainable in the short to medium-term”.​