Real estate firm CBRE says UK commercial property capital values fell 2.4 per cent in 2016, impacted by stamp duty tax and the Brexit vote.
Retail property capital values were the most affected, with a fall in value of 5 per cent on the previous year, whilst office property dropped 2.5 per cent.
Rental values increased 1.7 per cent year on year, but remain below levels seen before the vote to leave the European Union.
Commenting on the outlook for the UK property sector (1), Head of UK Research at CBRE, Miles Gibson said in the CBRE Outlook report: “2017 will be anything but boring. Political and economic pressures will put the property industry under pressure to perform next year. Rising inflation and bond yields, a tighter labour market and Brexit will seem like major forces ranged against performance.
"But on closer inspection we think property is likely to be rather less embattled than many might think. Although the demand side will unquestionably be a little weaker, supply shortages in many sectors, non-cyclical drivers in others, risk premiums that still look attractive, a general flight to safety, and the structural attractiveness of the UK, all add up to an ability to continue performing under severe external pressure."
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