Is General Election uncertainty affecting the commercial property market?
There is rarely a more uncertain time for the commercial property market and overall economy than before a general election. This insecurity is of course not helped by the fact we are still none the wiser as to whether it will be David Cameron or Ed Milliband as Prime Minister after May 7th.
However, in the midst of one of the most unpredictable elections in history, the commercial property market is still inspiring a great deal of confidence.
Last year’s growing confidence and momentum, as reported by many agents on NovaLoca, has continued into 2015 and this was confirmed by the RICS’s quarterly commercial property market survey, which revealed that occupier and investment activity in Q1 were still on the rise.
Demand for office and industrial property remains high, with retail playing catch up slightly behind. Both office and industrial property are in critical need of more supply and refurbishments on B-spec properties are becoming more common.
Previous elections have seen a period of caution before voting day and then a surge in activity in the following months, with last year’s Scottish referendum following a similar trend.
With momentum in the market continuing as we fast approach the election, the question still remains as to what the impact will be once we know who the new Prime Minister will be.
The fact is we really do not know. Could we see momentum accelerate even further when the uncertainty is lifted? Or will the political chaos caused by a hung parliament have an adverse effect on the market?
Opinions are divided amongst the industry too, as seen by comments attached to the RICS’s survey report. Here is just a few of the differing views.
John Kent, FRICS, London West End, CBRE: “Despite general election uncertainty there is a great deal of confidence in the market.”
John Lee McGuffog, Horsham, John L McGuffog FRICS MCIArb Chartered Surveyor: “Improvement continues but the result of the forthcoming general election could cause a downturn in confidence.”
Martin Trundle, Chichester Henry Adams: “Once the general election has come and gone I expect the market to gather more momentum.”
With everything up in the air, it seems we won’t know the effects on the commercial property market till long after the election. Of course, there’s also a chance that it won’t matter who it is in number 10, be it Cameron or Milliband, and it’s now supply and demand that’s driving the market, not politics.
How do you think the general election will effect the commercial property market? Let us know by leaving a comment below