Research - SEPTEMBER 20, 2016

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Brexit makes for unknown investment forecasts

by Jody Barhanovich

The new relationship between the United Kingdom and the European Union has yet to be mapped out, and future negotiations and unknowns will have an impact on investor and occupier sentiment. Nevertheless, the fallout from the U.K.’s Brexit referendum is expected to adversely impact commercial property metrics this year.

Colliers International’s third quarter U.K. Real Estate Investment Forecasts reports all-property total returns are predicted to fall by 0.3 percent, according to MSCI’s IPD All-Property Index, with income returns of 4.9 percent and capital growth of –5.1 percent. Meanwhile, all-property rental growth is expected to flatten in second half 2016, bringing the annual rate to 1.2 percent.

Industrial markets are set to replace office properties as the best-performing sector, with healthy total returns of 5.9 percent this year, comprising 0.5 percent capital growth and 5.4 percent income return. Industrial total return

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