Spring Forecast Update

• The negative impact on gilt yields caused by the latest national and global traumas has caused a wide division of opinion between our two protagonists.

• Bear falls just short of believing that the end of the world is nigh, but all Bull can see are great opportunities.

• Each of them set out their stalls and ultimately reach a working compromise.

• They settle on a 12-month All Property Total Return Forecast for (calendar) 2026 of 6.5%.

• But this only on the understanding that Bull can reinstate his previous ultra-bullish 2026 forecast of 10.5% for next year.

• Bull and Bear will be taking next weekend off to celebrate the Spring Bank Holiday.

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Residential Reform

• Bull and Bear discuss the UK housing market and most particularly, the changes that came into force with effect from 1 May with the introduction of The Renters’ Rights Act.

• The Act has been called the most significant reset of private renting in a generation.

• From 1 May, all residential tenancies will become periodic tenancies from the outset, meaning that tenants can no longer be locked into a fixed-term and, crucially, cannot be removed by a simple ‘no-fault’ eviction notice.

• Bull argues that the Act has fundamentally altered the long-established assumptions when it comes to residential investment, whether it be assumptions about tenure length, tenant mobility, exit strategy and tenant turnover. 

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Beating the drum for London

• After a breakfast meeting with some influential real estate professionals, Bear is convinced that 'Brand London' requires a re-boot.

• As the capital's new, self-appointed brand ambassador, Bear takes it upon himself to debunk some of the myths around crime, UK politics, and anti-business taxation policies that are holding back overseas investors. 

• Bull is only too happy to spell out the reasons why London is ranked 2nd in the St Bride's World Cities Index 2026.  

• But he is also spots an opportunity for 'home-grown' investors to seize the moment, whilst some of the overseas players sit on their heels. 

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London Infrastructure - On The Right Track?

• The tube strikes this week meant Bull's 'Love Work, Love Life, Love London' campaign got off to a rocky start, but Bear is quick to remind him that London still boasts a world-leading public transport system.

• The two consider what could be next on London's agenda and Bull unequivocally believes that Crossrail 2 - connecting south-west and north London - must be prioritised, especially after the resounding success the Elizabeth Line has had in promoting productivity and growth.

• Bear reminds Bull that politically, this may not be received well, and projects like Northern Powerhouse Rail must not fall by the wayside as a result.

• The two agree that both are essential to kickstarting UK productivity.

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London - World City 2026 - Part 2

• Even though London’s office market is recovering, the capital’s GDP growth and productivity are disappointing.

• As discussed last week, this is reflected in London being placed second behind New York in the St Bride’s World Cities Index 2026.

• With this in mind, Bear challenges Bull to champion a new campaign to reignite London’s growth.

• Bull is convinced that his upbeat promotional flyer will do the trick.

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London - World City 2026

• The results of the St Bride’s World Cities Index 2026 have been published and London has been ranked second again behind New York.

• It seems that the scores for business competitiveness and Government efficiency have let us down.

• Moreover, neither Bull nor Bear are happy that the UK has slipped into 29th place in the World Happiness Report - down from 19th last year.

• So, over this week and next, they discuss what needs to be done for London to recapture the number 1 spot.

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Residential Roadblocks

• Off the back of last week’s discussion about how the conflict in the Middle East was impacting the commercial property markets, Bull and Bear explore its impact on the residential markets. 

• There is little doubt that it has dented sentiment and has caused levels of turmoil in the mortgage market not seen since the disruption of the pandemic, or the infamous mini-Budget crisis in 2022. 

• Compounding the challenges currently being faced by the UK's housebuilders, was the publication this week of the Future Homes Standard. This sets out guidance for all new-build homes to include solar panels and heat pumps, or be connected to a heat network, by 2028. The consensus feeling is that these new standards will add even more red tape and cause construction costs to increase. 

• Bull and Bear have been given Easter Sunday off, so they will next be back with you on 12th April.

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Choking Point

• In a few short weeks, the US‑Iran conflict has already disrupted energy supplies and highlighted the fragility of the global economy.

• With UK 10-year gilt yields leaping to 5% on Friday, Bull & Bear assess how the markets have reacted and the implications for UK property investors.

• Development projects are most at risk, but the pair are comforted that property offers investors income resilience in moments of volatility.

• They both agree that striking a "deal" to bring the conflict to an end is an economic imperative for all parties.

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UK Offices - Build and They Will Come

• Following the news that the City of London has achieved a new prime headline office rent of £160 psf, Bull & Bear discuss how far this rental growth in the UK's prime offices could go. 

• The shortage of new build development across the UK is a concern to some and Bear thinks the Iranian war will further impact development viability.

• Despite this, Bull points out that prime rents seem to be exceeding minimum economic rents to make development viable and as tenants continue to pay top rents, the rental growth prospects show no signs of slowing down.

• On top of that, the signs are that the UK's regional cities are keeping comparative pace and could be on track to break the £60 psf mark soon.

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Downhill all the way? Absolutely Not.

• With the arrival of Spring, Bull is convinced that the time has arrived for investors to be back wholeheartedly in the market.

• However, Bear is in a sombre mood. He is concerned that the Iranian war will be a significant set-back to the recovery of the capital markets.

• Higher oil and gas prices, and general inflation, which will be driven by supply chain disruptions, are likely to deter any Bank of England interest rate cuts in the near-term.

• And … the prospects of the property sector’s principal benchmark (10-year gilt yields) falling are now looking very much less likely.

• Bull is undeterred.

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A Viability Crisis?

• In order to to try and forget about his beloved football team's current plight, Bull and Bear discuss John Lewis' decision this week to close its housebuilding business.

• They are concerned that if a trusted, well-funded national brand who is sitting on exactly the kind of brownfield and air-rights sites that policymakers want repurposed can't make housing schemes work, then there must be problems with the existing system.

• Whilst planning reform seems to be the Government's go-to answer, Bull and Bear believe the Government should also address the lack of affordable mortgage lending, as well as the sector’s rising taxes and regulatory costs.

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The Department Store Legacy

• After a bruising week of political and managerial sackings, Bull & Bear examine the legacy of the traditional department store as yet another House of Fraser prepares to close its doors for the last time.  

• The demise of so many department stores over the past decade threatened to leave gaping holes in the UK High Street. However, Bull & Bear are encouraged to discover how many former stores have been given a new lease of life and transformed in the process.

• The pair cite examples of legacy department stores being redeveloped into high-end residential apartments, student accommodation, offices, a hub for life sciences and even a whisky tasting experience.

• You can even try your hand at indoor-karting and urban street golf in some former department stores.  Now that has to be a silver lining!

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UK Life Sciences - Nursing a Headache?

• The news of British Land's agreement to buy Life Science REIT this week has got Bull & Bear talking about Life Sciences again.

• Despite British Land's interest, Bear believes the sector is under a bit of pressure at the moment. Venture Capital investment levels are down and big pharma companies such as GSK and AstraZeneca are focusing investment away from the UK.

• Bull thinks this may just be a passing phase, but both unequivocally agree that Government commitment to investing in the sector holds the key to kick-starting it again.

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Time to Think Small?

• Bear is having a moan about the growing imbalance between big and small businesses.

• Even though 99% of all UK companies (by number) are classified as micro or small, it seems that strategic and policy decisions are designed to favour larger organisations.

• Perfectly well-run smaller businesses (and funds) are being overlooked, abandoned, or swallowed up, in pursuit of shareholders’ ever-increasing demand for ‘Bigness’.

• When it comes to large businesses in a global context though, the UK is way down the pecking order. Our number 1 company, Shell, is only ranked 18th in the Fortune Global 500.

• Thankfully, a stronger pound recently has prevented even more (property) companies from being taken over by the Americans … at least for now.

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