Commercial top picks

City of London offices

Low vacancies, strong and diverse tenant demand, and a steady influx of new businesses from the West End will drive rents in the core City. Low- to mid-rise buildings with great accessibility and a strong local retail and leisure infrastructure will outperform.

Hybrid retail parks

Bulky goods and food retail are likely to be least disrupted by internet shopping. This, combined with recent price falls, retailer-friendly low rents, lots of car parking and comparatively low vacancy rates make this segment look attractive.

Residential top picks

Prime central London

Prices of prime residential property in central London have fallen by 20.4% over the past five years, leaving the sector looking good value in both a historic and global context. During the same period, the number of global ultra-high-net-worth individuals (worth $50m+) has risen by 30%. Despite a less accommodating tax environment than in previous recoveries, we expect a recovery to take hold in 2021, as the risk of onerous wealth taxes recedes at a time when the value of sterling bottoms out.

Retirement housing

The fundamentals of supply and demand are overwhelmingly attractive. The population aged 75+ stands at 5.4 million and is due to grow by 1.9 million over the next 30 years. There are 726,000 dedicated retirement dwellings in the UK. On this basis, we estimate the sector is as much as 45% undersupplied, even before factoring in a high risk of obsolescence of the stock that exists. Legal & General, AXA, and Goldman Sachs have already committed to the sector.

Rural top picks

Strategic land

Strategic land has been the investor’s UK land class of choice where it’s been available. But in a limited market, opportunities are few and far between. Ambitious housebuilding targets underpin faith that opportunistic capital returns will still be available, even if biodiversity net gain takes an additional nibble out of land value uplift.

The offsetting market

Offsetting land may present the most interesting income opportunity, as development pushes catchments to their limits and the private sector becomes increasingly interested in the services that land management can offer them. Location is everything, unless it’s the slowly emerging UK farmland carbon market, which presents a tantalising opportunity to attract major investment into some pretty remote and otherwise unappealing rural assets.

_{Read the articles within UK Cross Sector Outlook below.}