Hopes and Fears for 2019: Expert analysis on the property market
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This week we'll be hearing from experts across the county's industries and sectors, asking them what their hopes and fears are for their business year ahead.
Tune in every day for the rest of the week for analysis from the employment and export markets, as well as analysis on the local economy.
Today we hear from the property market, with analysis from Guy Gowing, managing partner at Arnolds Keys:
Making predictions is always a fraught process, because the outlook in January can always be affected by unforeseen happenings once the year is underway. Even with that caveat, assessing the prospects for commercial property in 2019 is an unusually tricky task.
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The underlying economy in the county remains strong, and that should translate into strong prospects for commercial property investors.
Of course, the big elephant in the room is Brexit, and in particularly the uncertainty that the long, drawn-out process of negotiation is creating.
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The last couple of months of 2018 have started to cast a long shadow over business confidence in Norfolk, and as we move into 2019, no-one can predict what will happen during the year.
But it's not all bad news. Whilst retail is undergoing a significant structural change (more on that in a moment), other commercial property sectors are looking good for the coming year.
Offices in particular have performed strongly in 2018, and are set to do so again next year. With considerable amounts of lower-quality office space having been converted to residential use, there is now a shortage of grade A office space – especially in Norwich – and that is likely to translate into increased rental yields and decent capital growth over the next 12 months.
I suspect we will also see speculative development in this sector in 2019 once Brexit is resolved.
Despite the Brexit uncertainty, our manufacturing sector is also performing strongly, and that is resulting in good demand for industrial and warehousing space.
Expect to see more development in 2019, especially on the coast (driven by the strong offshore engineering business) and in the northern city suburbs and market towns (as the Broadland Northway and A11 corridor continues to open up these areas).
Another strong sector is tourism, and we will continue to see an increase in supply of holiday lets, as more people move away from the residential buy-to-let sector.
The weak pound and a fear of travel disruption – whether real or perceived – is at least one silver lining for our county!
It is no secret that retail is undergoing a significant structural change, and this is likely to continue throughout 2019.
I don't believe pessimistic predictions that bricks and mortar retail is dead, but the High Street will certainly get shorter during 2019.
Norwich will remain a strong retail centre with prime sites still in demand, but the situation in our market towns will be more challenging.
With interest rates set to remain low, commercial property will remain an attractive investment in the coming year.
Choosing the right kind of property in the right location will be more critical than ever, but for those armed with good expert advice, the prospects for 2019 are pretty good.