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GGP February 2017

G L A S S & G L A S S PROCESSING Commercial targets GGP talks to Promac’s managing director, Joe Hague, about why the shockwave predicted to hit the UK commercial property sector post referendum hasn’t materialised, and what opportunities are on offer to glass processors as a result. P re-referendum investment in new commercial buildings – office, retail and industrial – was predicted to hit growth of 7% in 2016, becoming the fastest growing area of construction this year (Experian Construction Growth Forecasts). Immediately after it, predictions took a decidedly downward turn. The Brexit vote delivered a seismic shock which brought transactional activity in many cases to a juddering halt. The much heralded run on the retail funds was headline news for several months but after initially ‘running-to-the-hills’, institutional and private investors are back and so is the commercial sector. Yes, big pension funds are reported to be proceeding with more caution, hedging their bets while they wait for the format of the UK’s settlement with the EU to become more concrete. But the slack in the market as far as it exists has, according to analysts, been picked up by overseas investors. Recent reports suggest that the fall in the value of sterling has in fact increased market appeal to those with investment funds in other currencies. A recent poll amongst investment management company JLL’s global investor client base to gauge sentiment into UK commercial “Recent reports suggest that the fall in the value of sterling has in fact increased market appeal” property post the European Union referendum result, found that the majority of overseas investors believe that the fall in sterling since Brexit has created opportunities to invest in the UK’s commercial property sector. Overall, some 72% believe that investment openings have increased while 27% of those surveyed said that it was an immediate opportunity, with 45% agreeing but planning to wait. “As long as the UK retains some form of access to the single market, long term forecasts for the commercial property sector remain positive post-2017,” says Joe Hague, managing director, Promac Group. “Compared to some of the markets around the world in the post-Brexit Trump era, the UK in fact starts to look like something of a safe bet. “That means that as a market, it continues to represent opportunities for glass processors. Things are a little more difficult to call with certainty in the immediate term but if you look at longer term trends, prospects are actually very good,” he continues. Research into the market for commercial glazing suggests that between 2012 and 2014, the market grew by 29% in installed value terms. The volume increase over the two year period was 10% (Palmer). “Much of this growth in volume terms came from the public and education sectors, which accounted for 61% of the total market in 2014. This is an area with long lead times and is insulated from any short term loss of confidence i.e. projects commissioned for two or three-years ahead are still going ahead, regardless of any loss of confidence amongst institutional investors this year,” continues Joe. 26 www.ggpmag.com February 2017 Continued on page 28


GGP February 2017
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