When it comes to character traits, there are few less attractive ones than smugness. The Weekly readership therefore did well to avoid 5 St Bride Street this week as a particularly strong stench of smugness filled the air. Why? You may well ask! Well, it emanated from the fact that our All Property Total Return Prediction for 2018 was proved 100% correct, even to the nearest decimal point! In front of a packed audience at the Andaz Hotel at Liverpool Street on Wednesday morning, Hélène Demay of MSCI announced that ALL Property had delivered 6.0%, exactly the same figure predicted by Bull and Bear in their Prospects for 2018 publication last February.
The announcement of the performance figures inevitable leads to two further questions. Firstly, how did Bull and Bear get on with their other predictions, and secondly what on earth is going to happen in 2019? In a takeover of The Weekly over the next three Sundays, we will assess (today) how Bull and Bear fared last year. Plus we release our 2019 sporting predictions. We will make our economic and political predictions for 2019 next Sunday in what should be an interesting, if not a short read, and then on Sunday 24 February, we will share our property predictions for the year ahead.
2018 was a solid year for Bull and Bear. Before you say it, yes, it was probably long overdue, but getting nine out of twelve predictions correct in ‘such uncertain times’ did absolutely nothing to reduce the stench of smugness emanating from London, EC4. By way of a quick recap:
Theresa May will still be Prime Minister at the end of 2018. She still is (at the time of writing anyway), having overcome votes of no confidence both as a leader and in the Government.
UK GDP Growth in 2018 will again be higher than forecast by the OBR. We will find out tomorrow, but the indications aren’t positive. Growth in Q4 2018 slowed dramatically and a figure of around 1.3% for 2018 is now expected against an original OBR forecast of 1.4%.
Interest rates will be 0.75% in December 2018. They were, having risen by a quarter of a percentage point in August.
Brazil will win the World Cup in Russia. They didn’t. France did. But more remarkably, England won a penalty shoot-out!
Europe will win the Ryder Cup in France. They didn’t just win it, Team Europe routed Team USA 17.5 to 10.5 back in September.
Industrials will continue to out-perform. And boy how they did, delivering a total return of 16.4% for 2018. Offices delivered 6.25%, and All Retail ‘delivered’ a negative return of -0.5% for the year.
Retail investment volumes will remain subdued. Big, big tick. In fact, at £1.4bn, retail volumes in Q4 2018 were the lowest since Q2 2012, with retail warehouse investment volumes a whopping 64% below average.
Local authorities will play less of active role in the investment market in 2018. Oops! They actually invested a new record high of £2.2bn in 2018 (2017: £1.8bn) and in Q4 2018 alone, their acquisitions amounted to £749m.
Overall, overseas investors will not be not deterred from investing in UK property. They weren’t. The total overseas volume for 2018 reached £27.9bn (2017: £28.1bn), some 33% above the ten-year average. Once again volumes were dominated by Far Eastern investors, with a record £12.8bn invested, as they sought to take advantage of favourable exchange rates.
The UK Serviced Office Market will continue to expand. It duly has. According to Savills research, serviced office take-up in UK regional cities was estimated at 500,000 sq. ft. in 2018, a 14.7% increase on 2017. Capital Economics now forecast the UK Serviced Office market could be worth £62bn by 2025!
The Alternative sector will continue to increase its share of property investment. Momentum continues to build, with Q4’s volume of £2.8bn taking the total for the year to £10.6bn, eclipsing 2017’s previous high by 5% and making up a significant 17% of the total 2018 investment volumes.
Total Returns will be 6.0% pa (in 2018). They were, exactly, but you already know that!
The political, economic and property predictions for 2019 will be released over the next two Sundays, but as a gentle warm-up, click here for Bull and Bear’s ten predictions for the 2019 sporting calendar. Fingers crossed England beat France at Twickenham this afternoon to keep prediction one firmly on track!