Navigating the Path Ahead: Unica Capital’s Outlook on Property Values amid Inflationary Pressures
Navigating the Path Ahead: Unica 
Capitals Outlook on Property Values 
amid Inflationary Pressures

commercial office london property values

In the ever-evolving landscape of prime real estate office investment, Unica Capital has gained valuable insights during the first half of the year. The London property market is currently experiencing an adjustment, with property prices trending downwards. While this may pose challenges for some, it presents an optimal investment prospect for investors with high levels of liquidity  like Unica Capital or those with access to low-interest rates. As other investors divest their portfolios, different opportunities emerge, providing opportunities  in the market.

In the realm of prime commercial real estate, one notable advantage lies in the abundant array of assets that cater to investors across various investment levels. This market’s inherent versatility allows astute investors to explore options that align precisely with their financial goals and risk appetite, without the need to overextend their resources.

In Q1 and Q2 Unica Capital has observed that acting swiftly is key to securing the best deals. As the market rebounds and adjustments continue, the timing is ripe for strategic investment. Notably, the seven core markets, including London, have shown a return of investor interest after a period of weaker investment volumes. With central London appearing to have fully corrected, followed by Hamburg and Amsterdam, investors can anticipate increased transaction activity in these markets.

Higher interest rates have impacted the UK commercial property market, resulting in a decline in buyer activity and downward adjustments in valuations. According to CBRE figures, since July 2022, all-property capital values have fallen by 20%, with the industrial market experiencing a significant drop of nearly 30%. The rise in interest rates and changes in investor sentiment have played a pivotal role in depressing capital values. However, occupier demand and rents have remained resilient amid these changes.

Q3 and Q4, predictions for the year ahead.

This cautious stance is attributed to the anticipated continuation of above-average headline inflation, prompting a thoughtful approach to navigating the evolving real estate landscape. The lending environment may not be accommodating enough to alleviate this pressure, and the possibility of further rate hikes cannot be discounted. Consequently, investors must carefully navigate the market landscape to identify optimal investment opportunities.

Despite the challenging conditions, leasing activity in London remains steady. Notably, in their Central London office market report JLL have reported thirteen pre-lets across prime London City locations taking place during the second quarter, indicating ongoing demand for high-quality spaces. The service industry sector has been particularly active, with retail and leisure, insurance, and service office operators contributing significantly to quarterly leasing volumes.

Unica Capital is poised for Q3 and Q4 with their deep-rooted understanding of the market dynamics, allowing them to capitalise on opportunities that others may overlook. Their strategic approach to renovations and refurbishments ensures that they can elevate vacant spaces to higher standards and meet new ESG standards, maximising the potential of each property. As the London property market shows resilience and rebound, Unica Capital stands as a reliable and experienced partner for investors seeking success in the prime commercial real estate market.

Published: August 3 2023
Author: Byron Baciocchi

commercial office london property values

Based on in-depth research and thorough analysis of market dynamics, Unica Capital adopts a prudent outlook, recognising the potential for property values to face pressure over the next 12 months.

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