With negotiations over the UK’s withdrawal from the European Union ongoing and virtually no clarity emerging, uncertainty amongst businesses and consumers continues to weigh heavily on economic performance.

Considering the ongoing uncertainty surrounding the Brexit withdrawal terms and a potential trade war due to President Trump’s proposed trade tariffs, the performance of the economy has been stronger than one might have expected. The ONS reported GDP of 0.2% over Q1 2018 which was a slight improvement on earlier estimates. June’s CIPS survey reported the strongest growth in services activity for eight months, suggesting better prospects for the economy this year and strengthens the case for a further interest rate rise in August.

Commercial property markets have continued to perform strongly in early 2018, although we predict that yields will soften in the retail and office sectors in the latter part of the year. In light of the difficulties facing the retail industries as well as the uncertainties facing the financial services sector, we have revised our forecasts for commercial property total returns down to 4.5% in 2018.

Notwithstanding our downgrade to our short term forecasts, we remain confident in the ability of commercial property to deliver competitive returns to investors in the medium to long term.

For more information, please download our full report.