Iran war’s property impact will be small and short-lived

Given the fast-moving nature of events in Iran and the Strait of Hormuz, this global publication brings together our updated residential and commercial property market analysis and forecasts. It introduces our updated forecasts for US and UK housing as well as US, UK and European commercial property markets and replaces our usual outlooks this quarter.

The immediate impact of the Iran war has been to increase uncertainty and raise market interest rates, which will slow property market activity in the first half of the year. Assuming the war continues until the end of April and then de-escalates, there will also be a small impact on prices this year, with growth set to be weaker than our pre-war expectations envisaged. In commercial property sectors, retail and hospitality will feel the pinch most significantly over the next couple of years, but even there, we anticipate a relatively small impact in our baseline scenario, with much of the short-term softness made up later in the five-year horizon. In an adverse scenario with a more prolonged disruption to energy supplies, activity would slow for longer and property price falls would come onto the agenda. But residential rent’s link to nominal earnings growth would ensure performance holds up in that sector.

Join our commercial real estate economists for a special online briefing on Wednesday 15th April at 10:00 ET / 15:00 BST to ask questions and hear their views on the outlook for the sector. Register here.