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- September 1, 2011: Vol. 5, Number 8

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Designing for Growth: The UK Real Estate Market Is Facing Cyclical Challenges and Structural Change

by Nick Preston

Four years after UK real estate values started their precipitous decline, and nearly three years since the fall of Lehman Bros, investors in UK real estate are still battling with weak economic growth, impaired bank balance sheets and the threat of financial market disruption. And yet, despite all this, many investors still believe that commercial property in the United Kingdom looks like an attractive investment in spite of the continued cyclical changes.

From a UK perspective, those challenges stem from the fiscal austerity measures that are dampening near-term economic growth. Retail sales are likely to have been flat over the second quarter of 2011; consumer confidence is reversing the gains made in late 2010; the manufacturing sector’s PMI leading indicator has slumped to its lowest level since September 2009; and the unemployment rate has been stubbornly hovering at around the

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