The UK unemployment rate fell to 4.3% in Q3. Although still above pre-pandemic levels, this is at the level it was in late 2017, when the Bank of England raised rates for the first time in a decade to dampen inflation.
In real estate markets, all signs currently point to a busy year-end and start of 2022. Capital allocations to real estate continue to increase as leasing demand recovers and returns remain attractive.
- The UK economy grew by 1.3% in Q3 2021, a marked slowdown from 5.5% in the previous quarter. The UK economy is now 2.1% from its pre-pandemic level. We anticipate moderate GDP growth of 1.4% q/q in Q4, taking full-year growth for 2021 to 7.1%.
- October's 4.2% inflation rate is well above the Bank of England's Monetary Policy Committee forecast of 3.9%. A tight labour market, combined with increased concerns from the Bank of England about surging inflation, have only amplified the possibility of a Christmas rate rise.
- Despite persistent travel restrictions, international investors have increased their share of UK investment volume so far this year to 52.5%. 64 bps above the 10-year Q1-3 average.
- All signs currently point to a busy year-end for UK real estate investment, and with global institutions still significantly under-invested compared to target real estate allocations, demand is likely to remain elevated as we head into the new year.
Click to read UK Economic & Real Estate Briefing - November 2021
