Majority of property investors say the prospect of a base rate cut is boosting market optimism

Despite a drop in reported tenant stress, void periods have increased

Related topics:  Property,  Investment
Property | Reporter
10th July 2024
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"There is cautious optimism around the property market and activity amongst existing investors is picking up"
- Simon Bradley - Handelsbanken

Property investors are cautiously optimistic and focusing on the prospect of base rate cuts ahead of UK and global political issues, according to a new study from Handelsbanken.

Handelsbanken’s latest ‘Property Investor Report’ has found that more 52% of property investors say that the prospect of a rate cut in August and potentially a further cut before the end of the year makes them more optimistic about the market.

That is partly reflected in the easing of signs of tenant stress – around 53% of those questioned reported issues of rental deferral/contract negotiations, compared with 60% in Handelsbanken’s 2023 report. The number experiencing overdue or late payments fell to 34% this year compared with 41% in the previous year.

Voids remain stubbornly high

. 60% of the panel reported an increase in voids, up from 54% in the previous year although Handelsbanken believes this may be partly driven by tenant demand for quality and EPC ratings.

Polled ahead of the general election, the panel reflected wider market sentiment on the impact of a change in government, with the majority (51%) saying it would not affect plans for their business. Around two-fifths (40%) said geopolitical uncertainty made them more positive about the UK property market while 44% said it had no impact.

Simon Bradley, Chief Credit Officer at Handelsbanken said: “There is cautious optimism around the property market and activity amongst existing investors is picking up. It may be that many have decided the economy has potentially reached the top of the interest rate cycle and that the time is right to engage in new deals.

"We are seeing many of our Handelsbanken property professionals already looking to increase their credit lines in anticipation of potential acquisitions as market rates soften and property values stabilise over the coming months.

“The report also shows signs of tentative improvements in the stress factors affecting tenants, which have been driven in recent times by the cost of living and energy crises. However, most respondents appear unaffected by potential political uncertainty and don't believe that a change in the party in government will lead to significant changes in the market.”

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