Investment Bulletin March 2018

Interest rates unchanged

The Bank of England decided to leave the rates unchanged at 0.5% as the economy produced static GDP growth.

Values continue to grow despite fall in investment volume

Data from MSCI indicates that all property values continued to grow in Q1 and have now risen for the last 18 months in succession. The rate of capital value growth reduced to 1% from 2% in Q4 2017 with rental value growth representing 0.4% and yield impact of 8%. The initial yield on the MSCI monthly index hardened by 7bps in Q1 to 5.01%.

In Q1 2018 total investment in UK commercial property by both domestic and international investors reduced by 42% to £10.5bn from £18.1bn in Q4 2017. Investment in Central London offices decreased by 57% in Q1 2018 against Q4 2017 making up only 18% of all UK transaction compared with a long run average of 29%. Net investment reduced across all market segments compared with Q4 2017.

Retail apocalypse

Retailers have had a difficult start to the year with Q1 sales down 0.5% as a result of poor weather keeping many shoppers indoors.

Toys R Us, New look, Maplin and Mothercare have all recently been placed in administration with House of Fraser and Debenhams also reporting profit warnings.

Polarisation in the retail market looks set to continue with Forbes magazine summarising that physical retail is not dead. But, boring, undifferentiated, irrelevant and unremarkable stores are most definitely dead or dying.