UK Real Estate Outlook

Much of the positive momentum from 2017 continued into the first half of 2018, with the annual total return at 2Q18 standing at 9.4%, only a slight slowdown from the 10.3% achieved the previous year. Storm clouds are, however, gathering over the troubled UK retail sector, and we are now seeing the first signs of a pricing and rental correction, which is forecast to accelerate into the second half of the year. The weakness within the retail sector is ultimately the driver behind the slight downgrade of our full year expectations to 6.1% from 6.5% six months ago. And while the industrial sector looks set for another stellar year, we are also seeing the first indications that the pace of growth on both the occupier and investment side is starting to ease back slightly as we move into the second half of the year.

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