The UK economy is estimated to have grown by 0.9% in November 2021 and is now 0.7% above its pre-coronavirus (COVID-19) pandemic level.
The Omicron variant has resulted in record numbers of infections across the UK but while hospitalisations have been elevated, mortalities have been mercifully limited due to the effectiveness of the vaccination programme. Staff have once again been asked to work from home wherever possible and it remains to be seen whether quarterly GDP will reach or surpass its pre-coronavirus level.
Year on year CPI inflation increased to 5.4% in December from 3.0% in September. This is the highest CPI 12-month inflation rate since March 1992. Interest rates were increased by 0.15% to 0.25% in December and there are expectations of four 0.25% increases during 2022 to 1.25%. Arguments persist between those who see inflation as transitory and those who perceive that it may be more permanent.
The UK’s commercial real estate market enjoyed a spectacularly strong final quarter of 2021 driven by the industrial sector, retail warehousing and, unexpectedly, West End and Midtown offices. In Q4, All Property total returns, as recorded by the MSCI Monthly Index, increased to 7.9% and in the 12-months to the end of December 2021, All Property total returns increased to 19.9%.
All Property total returns are likely to average 10% or more over the whole of 2022 and could reach 9% in 2023 with an annualised average of 8% in the 3-years ending December 2024
