The outlook for property has been directly impacted by the monetary tightening cycle since 2022 as asset prices have undergone adjustments. Commercial property has been impacted by this more than Residential, due to the higher concentration of office and retails assets alongside the growing cost pressures on improving energy efficiency.
Post pandemic the shift to more remote working hit sectors such as offices, impacting vacancy rates. For example, vacancy rates in UK offices have risen from 10% in 2018 to now over 15%. The retail sector has also seen longer-term price declines, partly as a result of the growing online shopping trend.
From a longer-term perspective whilst there will be challenges, it may be a time of opportunity for long-term investors to make selective allocations at the current level of valuations.
