Country Report Great Britain Q2-2021
"Fears for the death of the Central London office sector appear to have been misplaced."

Dear readers,

"With high and rising vaccination levels and the easing of lockdown restrictions in July, continued month on month GDP growth and a strong forecast for the year we are seeing a degree of optimism returning to the UK economic outlook. This optimism is also reflected in much stronger occupier and investor activity. Fears for the death of the Central London office sector appear to have been misplaced. The trend of increasing take up of office space in Central London is continuing in Q2 and most encouragingly space under offer has risen sharply quarter on quarter. Changing working practices for many see growing appetite for high quality, flexible offices. Occupancy levels are also rising in residential sectors recently as employment confidence increases, lockdown ends and foreign students are beginning to return to the UK. It remains to be seen what impact the Delta variant - or any potential new variant - has on a largely vaccinated population, and the spectre of inflation lurks in the background. However, there is renewed confidence that we are heading towards a more stabilised economy."


Your Claudia Nacke

Contact

Ms Claudia Nacke
Head of Real Estate Finance UK, London Branch

Phone: +44 20 742 947 00
E-mail: Claudia.Nacke@DeutscheHypo.com

REECOX UK remains robust

The positive trend on the REECOX UK has continued for the fourth quarter in succession. Following significant growth of 6.9 % to 217 points in April, the REECOX UK posted stable rises of 1.2 % in May and 0.2 % in June. All in all, the indicator climbed by 8.3% in the second quarter to 219.9 points, which is on a par with the figure recorded in May 2018.

Benchmark index FTSE 100 back over the 7,000-point mark

The business sentiment as measured by the Economic Sentiment Indicator (ESI) made the largest contribution to second-quarter performance; its positive trend has been maintained since February. All in all, the ESI gained 14.6 % to stand at 105.3 points – the highest value recorded since October 2018. The UK stock markets also performed well, albeit to a less significant extent in relative terms. Britain’s leading stock market index, the FTSE 100, rose by 4.8 % quarter on quarter to close at just over 7,000 points. The FTSE EPRA/NAREIT UK real estate share index posted similar gains, ending the second quarter with growth of 4.5% to 1,256.5 points.

Synopsis of Input Variables and Real Estate Economic Situations Q2-2021

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q1-2104/2105/21Q2-21Delta (%)
Q1-21 / Q2-21
DE
up
up
upup
eq
eq
328.9
339.4
348.4
356.4
8.4
GB
up
up
upup
eq
eq
203.0
217.0
219.5
219.9
8.3
PL
upup
upup
upup
eq
up
181.7
191.4
197.6
197.8
8.9
NL
up
up
upup
eq
eq
188.2
197.4
201.7
204.3
8.6
FR
up
up
upup
eq
up
229.0
237.3
244.8
245.0
7.0
ES
up
up
upup
eq
up
175.1
181.2
184.1
183.4
4.7