Investor sentiment for UK property remains strong post Brexit

JLL�s UK Investor Confidence Index also highlights that most (58%) also intend to make no changes to their strategic weighting to the asset class, with more intending to increase (27%) rather than decrease (15%) their exposure to commercial property.

Mathew Atkinson, director in JLL�s capital markets team in Leeds, commented: �These results demonstrate that, despite the considerable issues around Brexit, the appeal of commercial property as an asset class remains undimmed � hardly surprising when yields for prime property with strong tenant covenants still attract yields of at least 4-5%, depending on location. To put this into perspective, average corporate bond yields are now at 2.19% and 10-year gilts at a little over 0.6%.�

JLL�s survey also showed that most respondents expect total returns from UK property to fall to around 5% after several years of record results. This would still be significantly better returns than for most other asset classes.

Atkinson added: �However, the strong survey results may also be based on the market assuming that the UK is more likely than not to retain access to the single market, with only 15% of respondents arguing that a so-called �soft brexit� was unlikely. If the departure from the EU turns out to be �hard�, with the UK losing access to the single market, around 51% expect a �moderate decline� in capital flows into UK property.

�We have seen no evidence of forced sellers in Yorkshire, and aside from a handful of UK sales resulting from one-off stress on the retail funds, we expect a broadly balanced market providing the wider economy remains stable.�

The uncertainty resulting from the vote has forced down JLL�s Confidence Index to the lowest level since Q3 2011. However, it should be noted that this remains considerably above the levels seen in late 2008.