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Savills warns of property slowdown

A succession of adverse developments will see to the end of a global wave of property activity

12 January 2016

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The real estate agent, Savills, has warned of an impending slowdown in the property markets for 2016, even though the company itself 'experienced a strong finish to the year'.

Savills said in a statement: 'In the light of heightened uncertainty over global economic prospects and rising interest rates, we expect a tempering of the strong transaction volumes of recent times in certain markets, notwithstanding that market fundamentals remain sound.

'Accordingly we retain our original expectations for 2016.'

Global property prices in some jurisdictions have experienced forecast-beating growth recently and this has been most evident in Britain, primarily London, where property prices increased in 2015 by 11.2 per cent to reach an average of £506,724.

Savills' investment management division completed the €1.3bn sale of Potsdamer Platz in Berlin on 31 December; a large public square complex comprising some 17 buildings.

The sale helped Savills beat expectations for 2015 and it was part of an international property wave which saw global real estate activity and prices reach their highest levels since the 2008 crash.

The group reports that as a result of this wave, it 'experienced a strong finish to the year with the completion of some significant commercial transactions in several of our businesses around the world'.

However the same level of activity and price increases are not expected for 2016.

The United States Federal Reserve's decision to increase interest rates for the first time since 2006 will bring to an end an era of easily accessible money, leading to suggestions that investors won't be able to invest as much into property.

Furthermore, China's struggling markets and the continuously low price of oil are also expected to have an adverse effect on property activity.

Savills will publish its full year reports for 2015 on 10 March 2016.