Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
Recovery in construction waning The fall in the headline construction PMI to its lowest level since May shows that the recovery in activity was waning even before the second lockdown began. Admittedly, construction sites will remain open this time around. …
5th November 2020
Commercial property transactions are likely to end the year around 40% down on 2019 totals. And with the prospect of an extended lockdown this winter, a slower economic recovery and falling capital values, this will weigh on transactions well into 2021. …
3rd November 2020
Outlook for offices and retail remains poor, while industrial shines Despite surveyors reporting a rise in industrial occupier demand in Q3, conditions for the retail and office sectors were still poor. In turn, expectations for all-property rental and …
29th October 2020
Rise in net lending to be short lived Having revised up figures for August, net lending rose for the second consecutive month in September. We think this can be explained by a pick-up in investment activity, but we think a deterioration in the economic …
Recent developments point to a weaker short-term economic outlook in the UK. In our view, this will weigh most heavily on next year’s office sector recovery and suggests that the turnaround that we expected in all-property capital values is now in the …
28th October 2020
A faster deterioration in office rents meant that all-property rental values fell at a quicker pace in September. As a result, with yields stable, all-property capital values declined less steeply. But with the rental outlook worsening amidst further …
23rd October 2020
An abrupt U-turn on workers returning to their offices last month signalled that the virus will continue to dominate lives in the UK into next year. In fact, we think office working may never quite be the same. As more remote working could reduce space …
19th October 2020
In the current environment, bank lending to property will likely stay weak. Moreover, falling values are expected to lead to an estimated £30bn re-financing gap in the coming years, which will put pressure on investors to find other forms of finance or …
16th October 2020
Banks maintain property lending caution Mortgage availability saw a modest improvement Q3, but not enough to reverse the large fall seen in Q2. Meanwhile, credit availability to commercial property fell sharply during the quarter, and lenders expect to …
15th October 2020
Along with difficulty in conducting viewings, London’s hard-hit hospitality and leisure sectors meant that there was a sharp fall in multi-let industrial take-up in H1. While availability is likely to rise further in the coming months on the back of …
9th October 2020
Retail has been hit hard by the COVID-19 crisis and lasting changes to online spending will bring further pain. While our estimates suggest that the impact is likely to be less severe than structural change in offices, the rental outlook is expected to …
8th October 2020
Construction growth edges up in September The construction PMI strengthened in September, driven by an improvement in both the commercial and residential sectors. Still, with fresh virus restrictions likely to hit commercial occupier demand further, …
6th October 2020
The resurgence in virus cases in the UK has led the government to reverse its advice on returning to the office. Given that many workers continued to work from home anyway, the impact of this change in policy is likely to be limited. That said, the new …
2nd October 2020
While we continue to think that this year’s property downturn will be milder than in past cycles, next year’s recovery is looking more fragile. This in part reflects revisions to our economic view, but also structural changes which are weighing on the …
1st October 2020
As the differences between a Brexit deal and a no deal are not as big as they once were, the economic costs of a no deal have diminished. The bigger risk is that relations between the UK and the EU deteriorate to such an extent that both sides start to …
Net lending likely to turn negative again Having fallen sharply in July, net lending to property was practically flat in August. As the recovery in transaction activity show signs of slowing and banks are less willing to grant further payment holidays, we …
29th September 2020
Though the slowdown in the pace of rental and capital value falls in recent months seems to suggest that pricing is stabilising, we expect there will be further upward pressure on yields this year. After all, the rental outlook has deteriorated. And with …
25th September 2020
News that the government has extended the ban on commercial property evictions will be welcomed by tenants, especially in the hard-hit retail and hospitality sectors. But, already facing high levels of rent arrears, this will be a further strain on …
22nd September 2020
Our analysis suggests that UK commercial property is fairly valued when compared to the pricing of alternative assets. However, with that finding based on the assumption that current income streams are sustained, we think that it is unlikely to provide …
18th September 2020
Shopping centres are likely to suffer in the near term as people avoid enclosed spaces, shop more online and as retailers continue to go bust or consolidate space. Since mid-2018, rents have deteriorated fastest in larger centres, and we think this trend …
10th September 2020
Even after the immediate threat of COVID has receded, we expect as many as 50% of office-based employees will work from home at least once a week. But the move away from cities and toward the suburbs should prove short-lived. Most of those leaving cities …
9th September 2020
Deterioration in the outlook for next year The latest IPF Consensus Forecasts were revised down over the forecast horizon, with notable downgrades to next year’s outlook. Our views are broadly in line with the IPF in terms of sector rankings, but we take …
4th September 2020
Residential recovery outpaces commercial While the recovery in both commercial and residential construction lost momentum in August, growth in housebuilding far outperformed commercial. This trend is likely to continue, reflecting the stronger outlook for …
Negative net lending expected to continue in coming months In line with our expectations, net lending to property saw a marked decline in July as transactions remained low and banks tightened their belts. We expect banks’ willingness to grant further …
1st September 2020
The impact of the pandemic on property has superseded that of Brexit, but that’s not to say that Brexit risks can or should be fully discounted. While we expect a slim deal to be agreed this year, we don’t envisage it having a notable upside effect on …
28th August 2020
Rents and capital values fell at a slower pace in July than was recorded in June. But, while values seem to be approaching a degree of stability, we expect a deterioration in the rental outlook will put renewed upward pressure on yields. Total returns …
27th August 2020
Overview – The near-term outlook for most commercial property sectors is poor despite the early signs of economic recovery. Although transactions are set to pick-up post-lockdown, we think property yields will rise further as the rental outlook …
19th August 2020
UK assets may outperform overseas assets over the next year or two even though the UK’s economic recovery from the coronavirus crisis may take longer. We think that a larger expansion in the Bank of England’s quantitative easing (QE) programme than the …
13th August 2020
Travel restrictions and caution shown by holidaymakers have hit the hotel sector hard. While there has been a boost from the temporary cut in VAT for hospitality and tourism, weak global growth and virus-related restrictions and uncertainty will continue …
11th August 2020
We think that the enforced remote-working experiment of recent months will cause a dramatic demand shift in the office sector, with as many as 50% of office-based employees working from home at least once a week. Even with a heroic supply response through …
6th August 2020
More encouraging signs for construction, but commercial expected to lag The rise in July’s construction PMI is an encouraging sign for activity. Looking ahead, we expect housing construction will lead the upturn in activity, while further falls in values …
We expect office-based employment growth to be faster than total employment growth by around 0.3-0.5% ppts each year over the next decade in the US, the UK and the euro-zone. The coronavirus crisis will dampen the outlook in the short run, but the less …
4th August 2020
The outlook for property deteriorates further The RICS survey confirmed demand for property declined again in Q2 and the outlook for rents and capital values worsened across all sectors. While surveyors were most pessimistic about retail and offices, …
30th July 2020
Slowing net lending likely to turn negative in H2 As expected, net lending to property eased in June from the sharp rise in May. As the recovery in transaction activity is likely to be slow, we expect demand for new lending to be weak for the rest of the …
29th July 2020
Although there were further signs of stabilisation in June, we expect that the slow recovery in the economy will continue to put upward pressure on yields in the coming months. Meanwhile, rents fell by 0.4% m/m in June, the same pace as the previous …
27th July 2020
The strength of industrial take-up in Q2 was driven by a ramp-up in delivery capacity, particularly by supermarkets and Amazon. Along with the continued upward trend in the MSCI monthly data, this suggests potential upside risk to our industrial rental …
24th July 2020
Credit crunch for mortgage lending Mortgage credit availability collapsed in Q2, while commercial loan conditions improved on the back of government loan guarantees. Looking ahead, lenders expect both commercial and residential property lending to fall, …
16th July 2020
Global property markets are expected to see a lasting impact from the effects of the COVID-19 outbreak. Over the coming weeks, we will publish a series of pieces looking at the post-pandemic future across the main property types. We start this by …
15th July 2020
The most recent UK economic indicators have been better than expected. This suggests potential upside to our commercial property rental forecasts. But there are significant uncertainties ahead and, with activity expected to be well behind its pre-virus …
9th July 2020
Construction rebound outstrips expectations June’s PMI construction jumped back above 50 for the first time in four months, confirming that activity is starting to return to normal. The improvement was driven by both commercial and residential sectors and …
6th July 2020
While all-property capital values lag real estate equity prices, the movement in REIT prices can also tell us something about sector performance. The staggered recovery in REITs from March’s low point supports our view that capital values for industrial …
3rd July 2020
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
29th June 2020
Lending likely to turn negative in the coming months The notable rise in net lending in May was probably due to lenders allowing for payment holidays rather than an increase in new loans to investors. But, these measures can only continue in the …
While rental values fell sharply in May, this was in part offset by yields increasing at a much slower pace than the previous month. In turn, this led to a less steep fall in capital values, but annual returns remained negative. As the negative impact of …
26th June 2020
UK retailers continue to suffer, even given the recent re-opening of shops and signs of improving sales. Shopping centres have fared worst and this has been highlighted by the woes of owner Intu. And as some of the underperformance reflects deeper …
While there has been a decline in the number of pubs, revenues had been rising in recent years. This has led to some big deals in the sector and falling prime yields. Nevertheless, when pubs re-open, social distancing and reduced tourism are likely to …
19th June 2020
While demand for student accommodation has risen during past downturns, we expect it will be very different this time. Uncertainty around face-to-face lectures and travel restrictions could lead to falls in demand for student accommodation for 2020-21. …
16th June 2020
The latest IPF Consensus Forecasts revealed sharper than expected downgrades for the next few years, largely based on revisions to retail rents. Our views are now above this consensus, though we don’t see this as good enough cause for a further downgrade. …
12th June 2020
A reasonable proportion of the Central London office completions for this year are likely to be pushed into 2021, but a fall in employment will hit demand for office space and lead to a pick-up in vacancy. This will put downward pressure on rental values, …
9th June 2020
Gradual recovery in property construction May’s rise in the construction PMI suggests that April was probably the low point for activity. The improvement was driven both the commercial and residential sectors. Looking ahead, with lockdown gradually being …
4th June 2020
