Monthly UK Economic & Real Estate Briefing – June 2020
The release of GDP growth figures reveal the true extent of the full lockdown on the UK economy. The numbers confirm the economy shrank by 2.2% in the first quarter of this year. In the investment market, the pricing discovery mode of last month is slowly receding, with activity resuming in Central London, but fears over the occupational market mean most investors remain tentative and risk-averse.
- UK GDP fell by 2.2% in the first quarter of this year, the largest fall since the third quarter of 1979.
- The latest labour market data provides some relief to the Bank of England, who had forecast unemployment to rise to 9.0% in their illustrative scenario for Q2, but the real impact of the pandemic has been disguised by Government policies.
- Pricing uncertainty is receding for some asset classes, and flagship office sales are proceeding in Central London, with Hong Kong-based investors particularly active. This should start to encourage institutional investors to consider opportunities again.
- That said, significant challenges to liquidity remain. Activity in the smaller lot size ranges remains suppressed as private investors struggle to source new finance, and the June Quarter is widely expected to bring sharp falls in rent collection and more tenant failures.