David Parsley’s article is an interesting one, although it all depends on one’s definition of ‘peak’.
If you take it to mean the highest total return or capital value growth recorded over a single period, then I think most people would agree that 2015 is the ‘peak’. In fact, as far back as November 2012 the IPF consensus forecasts indicated that the market expected 2015 to see the ‘peak’ in returns.
You could also take ‘peak’ to mean an inflection point in a performance index, but which index? If we use capital value growth, then Mike Prew’s forecast of a negative 1% movement in capital values would indicate his view is actually that values are set to peak somewhere in 2016. If you were to take total returns, I would imagine his forecast would not see a ‘peak’ until sometime in 2017.
I’ve not even touched on rental value growth, but I’m assuming even people at Jefferies aren’t that bearish considering their rumoured 150,000 sq ft pre-let negotiation.
In terms of Dr Sieracki’s view on the market, I would suggest it may be a little simplistic to just use an overall transaction volume and average yields to call the market.
There is a lot of devil in the detail when considering the investment market, and while we may have seen overall UK volumes highest in the second quarter of 2015, it is likely that this is a function of lower supply of product in the market. Indeed, with more assets coming to market before year end, I would imagine we could see a reversal in the downward trend identified in the research.
So, there’s a plurality of views out there. The collective wisdom of your readership indicates 2016 as a ‘peak’ - maybe they are right?
Alistair Kemp via PropertyWeek.com