Specialist property agent Colliers International has revealed its property predictions for 2016, and says that business for hotels will continue on the up next year.
Assuming that the EU referendum bill becomes law in January 2016 and Cameron secures some form of renegotiation deal in Q1, we expect the referendum to happen in Q3 2016 with the voter split closely mirroring the 1976 pole – with two thirds supporting EU membership.
Economic momentum should be such that the Monetary Policy Committee (MPC) will look to increase the base rate by 25bps in Q4 2016.
• UK regional hotels will see continued healthy growth in trade and value, growing in line with the economy which remains stable and supported by accommodative monetary policy.
• Strengthening business investment UK-wide and improved household disposable income will increase both tourist and business trade.
• A modest increase in interest rates in Q4 16 will not dampen hotel TOCG or investment demand.
• UK investment volumes are expected to moderate in 2016, but are still expected to clear £50bn.
• Pricing is expected to remain firm as the weight of capital, particularly from Asian and North American core investors competes for long-term secure income product.
• The liquidity and transparency of the UK market will continue to be attractive to global institutions, which are expected to continue to increase their weightings to real estate in 2016.
• All Property total returns will continue to drift back to more ‘normalised’ high single digit levels with only City, Midtown and Rest of London offices expected to generate double digit returns in 2016.
• We expect the UK development cycle to accelerate as UK debt conditions improve and overseas investors seek domestic partners and expertise to help with capital placement, diversification and risk reduction.
• Speculative development activity fell to a four year low at the end of 2015. 2016 will see pre-letting agreements being signed even earlier in the construction cycle and a return of pre-lets off plan in the West End.