As the outline of a new property landscape appears through the settling dust, investment professionals can start to do their jobs again.
When the UK moved into lockdown, inaction became the preferred strategy of many investors, and the investment market saw trading drop sharply. Doing something – buying, selling or lending – was like trying to catch a falling knife. Deals done since March have largely been those on which the wheels were set in motion pre-covid, perhaps completed now more slowly than planned and on revised terms.
According to CBRE’s monthly UK index, commercial property values fell by 7.2% between January and July 2020, with retail the worst performing of the main sectors by some margin. One would have to be a tremendous optimist to imagine this is anywhere near the end of the correction, which is sure to persist well into double-digit territory on an all-sectors measure – with retail continuing to apply much of the downward pressure.
However, a price correction under way generates an environment of negotiation where bargains can be secured. That much of the distress is heavily concentrated in retail and hospitality also creates greater
confidence to look at other property sectors. Pressure will now build on fund managers (and lenders) to move off the sidelines and get back to participating in the market. September is looking like a back-to-work month for the investment world.