Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
UK employment has faltered of late and, though growth is expected to improve, no return to the buoyancy of the recent past is in prospect. While headcount has become a weaker indicator of office floorspace needs, the jobs outlook reinforces our view of a …
10th July 2024
The slower adjustment to past rises in interest rates and sharper hit to office demand mean US property is set to underperform European property over the next five years. But unlike equities, we think US economic outperformance will translate into …
8th July 2024
The headline CIPS construction PMI edged back in June from its two-year high last month, but at 52.2 remains in expansionary territory. Both the commercial and housing balances retreated, with the latter falling back below 50, indicating some contraction …
4th July 2024
This chartpack is a new addition to our suite of commercial property analysis, which pulls together our views across the three regions we forecast and provides important context for investors. The slower adjustment to past rises in interest rates and a …
3rd July 2024
The consensus is still downbeat on the outlook for retail rents, with growth expected to underperform even the struggling office sector. But with a decent consumer recovery on the horizon we think that pessimism is misplaced. As inflation falls back and …
2nd July 2024
Net lending to property shows early signs of a recovery Net lending to property increased for the second consecutive month in May, rising by £1.0bn. The increase was entirely due to a rise in lending to standing investments, with development lending …
1st July 2024
News that some top-rated CMBS in both the US and Europe are set to make losses is in line with our previous view that distress will ramp up in 2024. But, to date, the troubled securities have all been backed by some of the worst-performing assets across …
27th June 2024
Higher costs, lower risk, a better rental growth outlook and competition from less yield-sensitive buyers all help explain why residential yields have been below other commercial property sectors for the last 30 years. While some moderation in buy-to-let …
25th June 2024
With inflation back to target the stage is set for a decline in interest rates. Indeed, we think that the 10-year gilt yield will have dropped to 3% by end-26. But we don’t think that will lead to much in the way of property yield compression. Rather, …
21st June 2024
Capital values are close to bottoming out in most sectors as yields have stabilised. However, with no yield compression and moderating rental growth the recovery will be weak by past standards, not helped by a struggling office sector. But residential …
20th June 2024
The latest Crane Survey reported that a record high 16.4m sq. ft. of London office space was under construction in Q1. That in part reflects developers delaying projects until the demand outlook becomes more certain. But a decent level of new starts also …
13th June 2024
Construction activity picks up in both housing and commercial sectors The headline CIPS construction PMI rose to a two-year high of 54.7 in May. Both the commercial and housing balances improved, with the latter rising above 50 for the first time since …
6th June 2024
Inflation has been stickier than we had expected and we have therefore pushed back when we think the Bank will start cutting interest rates. That may put a little upward pressure on property yields over the next couple of months. But we still think …
4th June 2024
Net lending subdued on the back of rising interest rates Following two consecutive quarters of declines, net lending to property reached £891m in April. The increase was driven by a £731m rise in lending to standing investments, but development lending …
31st May 2024
Overview – Capital values for most property sectors are now close to bottoming out, but with yields set for a period of stability the recovery will be modest by past standards. We expect all-property total returns to average 7.5% p.a. over 2024-28. That’s …
30th May 2024
The latest IPF Consensus Survey showed limited change on the previous forecast round in March. There was a small upward revision to all-property rental growth expectations for 2024, but a downgrade to total return expectations, which implies yields are …
29th May 2024
While the timing of the sharp hit to UK commercial real estate values owes much to the ill-fated “mini-Budget” of September 2022, we think the UK’s role in leading the valuation downgrades also owes to its relatively insulated lending market in this …
28th May 2024
At our recent roundtable we shared our view that strong rental prospects mean residential property is likely to outperform other commercial property sectors over the next five years. The slides from the event are available on our website . Across the …
17th May 2024
This note answers some of the most frequently asked questions that we received from clients during a recent online briefing about the latest US tariffs on China. Watch the original briefing here . What has been announced? Yesterday was the end of a …
15th May 2024
Spending on hotels and overseas visits to the UK are still not back to their pre-COVID-19 levels. But with cost-of-living pressures set to ease around the world and consumer spending likely to outpace overall GDP growth in the UK, demand will recover over …
UK Commercial Property Valuation Monitor (Q1 24) …
10th May 2024
Commercial activity rebounds, but housing still subdued The headline CIPS construction PMI rose for the fifth consecutive month to 53.0 in April, a 14-month high. The rise was driven by improvements to the commercial and civil engineering components, …
7th May 2024
The revolution in remote work has not been kind to the office sector. But smaller, higher quality offices have performed relatively well over the past couple of years. With fewer workers in the office firms have been able to cut space requirements and …
2nd May 2024
Net lending has a weak start to the year Following a dip in February, net lending to commercial property ticked up in March, but the rise of £259m was modest and entirely due to lending to standing property. Looking through the monthly volatility net …
30th April 2024
The wide divergence in global office market performance to-date has been driven by significant differences in the return to office and the impact that has had on occupiers’ leasing decisions. US markets have been the major losers, while those in …
29th April 2024
While expectations for interest rate cuts in the UK have been pared back in recent months amid growing inflation concerns in the US, we think the markets have gone too far in concluding that UK interest rates will still be as high as 4.00% by the end of …
The Q1 RICS commercial survey provided further evidence that occupier demand has turned the corner, with demand ticking up in the industrial and office sectors. But with availability still elevated, office and retail rents are expected to decline over …
25th April 2024
All-property yields have been broadly stable since the start of the year. Higher-than-expected interest rates mean yields may see a further small rise over the next few months, but we still think they will flatten out by end-24. However, with no yield …
24th April 2024
New more granular MSCI data shows that the outperformance of residential property over the past decade was primarily down to student housing. Indeed, only in the past couple of years have multifamily returns exceeded that of all property. But with overall …
22nd April 2024
After a positive end to 2023 commercial property investment has since lost momentum, not helped by a rebound in interest rates. But we still think interest rates will fall back this year and, while commercial capital values may see a further decline, …
12th April 2024
Residential has taken an increasing share of the professional investment universe over the last decade or more and we will be adding the sector to our next set of UK commercial property forecasts. Our in-depth analysis indicates residential’s recent …
11th April 2024
Construction PMIs edge closer to expansionary territory The headline CIPS construction PMI rose to 50.2 in February, the first time it has risen above the no change level since August last year. The rise was driven by small improvements across the …
5th April 2024
Net lending declines for first time in a year Net lending to commercial property edged back for the first time in a year in February, with declines in both standing and development lending. But the falls were marginal and on a three month average basis …
2nd April 2024
The drivers of industrial rental growth were turned on their head during the pandemic, but we expect the pre-COVID-19 relationships will soon be reestablished. That points to consumer spending as an important factor, reflecting the growing importance of …
26th March 2024
All-property total returns have turned the corner, with a month-on-month rise in January and February. Rental growth is set to continue to ease, but yields are close to a peak and that will remove the downward pressure on capital values over the next …
19th March 2024
The online share of retail sales is still above its pre-pandemic trend, but a closer look suggests that is perhaps not as bad for the retail sector as it looks. For example, the share of online clothing sales has declined over the past year, which implies …
13th March 2024
The latest IPF Consensus Survey shows that forecasters have upwardly revised their 2024 expectations, which are now more in line with our view. Stronger rental growth help drive that improvement and that has also pushed up returns across the forecast …
8th March 2024
Construction PMIs edge closer to expansionary territory The headline CIPS construction PMI rose to 49.7 in February, just under the no change level. The rise was driven by the housing component, with commercial activity edging back a touch. As interest …
6th March 2024
Relatively high interest rates and structural problems within offices will weigh on the commercial real estate recovery over the next three years. Indeed, we forecast the upturn will be weaker than in any previous cycle across global markets. And with …
4th March 2024
Net lending increases in January but new development still subdued Net lending to commercial property increased for the eleventh consecutive month in January. Over H1 2024, we expect investment and lending to new development to slowly recover, as capital …
29th February 2024
The latest crane survey reported the highest volume of London office starts on record. In part that reflects a refurbishment boom as developers retrofit their buildings to meet MEES standards and benefit from the green premium. New development is also …
28th February 2024
A version of this report was originally published as an opinion piece in The Times on 28th February 2024. The government will reportedly unveil an initiative to encourage lenders to offer 99 per cent mortgages in the spring budget. If implemented, it …
Note: We’ll be discussing the UK commercial property outlook at a Drop-In on Wednesday, 28th February. Register here Property Drop-In: UK commercial property’s muted recovery | Capital Economics for the 20-minute online briefing. Overview – With property …
23rd February 2024
This week we held a Drop-In on commercial property distress across the US, UK and Europe. Clients can access a recording here and find related analysis on our dedicated landing page . This Update provides answers to several questions on the UK and …
16th February 2024
We will be discussing whether the next government will move the dial on the economy in a 20-minute online briefing at 3pm GMT on Wednesday 13th March. (Register here .) The next general election won’t be as pivotal for the economy or the markets as the …
13th February 2024
Another rise in all-property yields in Q4 helped valuations improve slightly. But on our measure all-property still looks substantially overvalued. Looking ahead, a fall in alterative asset yields will help valuations gradually improve this year, but they …
8th February 2024
Distress in the US commercial property market is once again in the news, but the risk of that spreading to the UK is low. The rise in aggregate loan-to-value ratios to date looks manageable and with interest rates also trending down we doubt there will be …
6th February 2024
This page has been updated with additional analysis since first publication. Construction PMIs start 2024 in contractionary territory The rise in the headline CIPS construction PMI from 46.8 in December to 48.8 in January was driven by improvements in …
Our forecast that CPI inflation will fall below 1.0% later this year suggests that Bank Rate will be cut from 5.25% now to 3.00% rather than the low of 3.50-3.75% priced into the market, 10-year gilt yields will decline from 3.90% now to around 3.25% by …
30th January 2024
Resilient lending in December, but anaemic investment volumes Net lending to commercial property increased for the tenth consecutive month in December, but investment sentiment remained downbeat. Looking ahead, we expect investment to slowly recover over …
