Country Report Great Britain Q3-2018
“Many investors are shifting their focus to rental apartment construction.”

Dear readers,

The overall transaction volume on the real estate market in the United Kingdom decreased slightly in 2018 – even in London. But, of course, its very high level has to be taken into account: Despite the decline, London remains the top investment location in Europe. To date, the uncertainty regarding the United Kingdom’s exit from the EU has not changed that. The market is transparent and we have observed brisk investment activity. Many investors are, above all, shifting their focus to rental apartment construction. That is not only because this asset class would be less strongly impacted if the United Kingdom was to leave the EU. Demographic changes and general price development mean there is solid potential for growth in this area. As a whole, the market has proved to be resilient. The rest is down to the politicians.

Markus Nitsche

Contact

Mr Markus Nitsche
Managing Director Great Britain

Phone: +44 20 742 947 00
E-mail: Markus.Nitsche@deutschehypo.com

UK Real Estate Economy Index stable

After very positive development in the second quarter, the UK Real Estate Economy Index “normalised” again in the third quarter. At 216.5 points it is slightly below its level in the second quarter (-1.1 %), but maintained its overall high level despite Brexit.

Business climate index unfazed by Brexit

The development of the contributing indicators varied strongly. Due to a significant fall (-4.1 %) in August, the UK’s leading share index, the FTSE 100, displayed negative overall development to 7,510.2 points. That represents a decrease of 2.3 % compared to the previous quarter.  The development of the FTSE EPRA/NAREIT UK real estate index was even more striking: it was negative during entire third quarter. Compared to the previous quarter, the decline of 6.5 % to 1,203.1 points was therefore significantly negative.

Meanwhile, the business climate index appeared unfazed by Brexit and developments on the stock markets: The assessments of real estate experts reflected by the Economic Sentiment Indicator (ESI) developed positively again in the third quarter. Its current level of 108.4 points represented an increase of 1.4 % compared to the previous quarter.

Synopsis of Input Variables and Real Estate Economic Situations Q3-2018

Country

Stock Index

Real Estate Economy Index

Economic Indicator

Base Interest Rate

Interest Rate 10-Year Government Bonds

Q2-1807/1808/18Q3-18Delta (%)
Q2-18 / Q3-18
DE
eq
up
eq
eq
eq
310.7
314.9
316.3
312.8
0.7
GB
do
do
up
upup
up
219.0
218.8
218.8
216.5
-1.1
PL
up
do
do
eq
eq
189.1
190.8
189.8
188.3
-0.4
NL
up
do
eq
eq
eq
200.4
201.5
200.5
199.3
-0.5
FR
up
do
do
eq
eq
237.7
238.9
237.9
236.2
-0.6
ES
dodo
do
dodo
eq
eq
204.1
200.7
198.8
196.4
-3.8