The UK's property markets in 2014 will be characterised by strong and rising demand and a dearth of supply, particularly in London, according to Jones Lang LaSalle's property predictions for the year ahead.
Jones Lang LaSalle's 2014 property predictions also speculate that increasing competition for the limited pool of prime conventional assets will drive investment interest in growing alternative sectors such as student accommodation and the residential Private Rented Sector. London will continue to dominate the economy and while regional cities will benefit from constrained supply, the north-south divide will continue to grow and there will be increasing polarisation between major cities and secondary centres as retailers and office occupiers focus on the locations with the facilities and catchment they require.
Within the retail sector, the ongoing shift to multi-channel will continue to redefine the way we shop, reorganising the hierarchy of both shopping centres and city centres. There will also be increased speculation regarding interest rate rises although the return of rental growth will mean that investment volumes will remain buoyant.
Jon Neale, Head of UK Research at the property consultancy, said: “The UK will be among the strongest economic performers in the developed world this year. Higher demand and restricted supply will fuel rising prices and rents across both commercial and residential markets, particularly in London.”
“With the economy on the upturn, businesses will increasingly make long-delayed decisions about their space requirements, driving even higher leasing volumes than in 2013. The lack of supply and rising rents will force occupiers into new districts of London – and the regional cities especially Bristol and Manchester could also benefit. Lack of prime product – and falling returns – will push investors to move up the risk curve, to secondary stock and non-core locations.”
“Meanwhile, in the residential market, a reviving economy and mortgage market will fuel domestic demand amid an ongoing housing shortage. House prices will continue to rise strongly in 2014, particularly in the capital, where overseas investor interest will remain intense despite government intervention.”
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