"Property prices in London could fall by as much as 10pc over the next few months, as the UK commercial real estate sector moves out of a bull market, according to analysts.
Of most concern is the value of offices in the capital, but with “lacklustre” consensus forecasts for GDP, analysts at City stockbroker Peel Hunt have also downgraded growth expectations for regional property, especially retail outlets.
“It is very possible that the long bull market in physical real estate is over,” analysts said. “However, we don’t expect a repeat of the 2008/09 crisis.”
Peel Hunt said growth in the rental value of London offices was likely to disappear, or even reverse, resulting in a drop in the value of buildings.
If financial firms lose 'passporting' rights during trade negotiations with the EU, the amount of office space rented in London could fall by around 4pc, analysts said. In the meantime, tenants are likely to delay almost all major leasing decisions and potentially sub-let some of their excess secondary space.
The stockbroker also warned that the value of retail property could be hit by the fall in the pound and declining consumer confidence, combined with the continued popularity of online shopping, which might reduce demand for bricks and mortar lettings."
Source: Value of London offices to drop by up to 10pc as City feels Brexit pain, analysts warn
