Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
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
Net lending expected to decline in the near term As expected, net lending turned negative in April following a sharp rise in March. Given that transaction activity will see a fall in the second quarter of this year, we think that net lending to property …
2nd June 2020
Returns outlook deteriorates The latest IPF Consensus Forecasts were revised down sharply, given the downbeat outlook for the economy and its implications for property. While our views on offices and industrial appear to be broadly in line with the …
29th May 2020
Yields rose again in April and there is more of the same to come over the summer months. While rental values fell slightly, the rise in yields meant that capital values declined by 1.8% m/m in April. This saw annual returns turn negative for the first …
Overview – The coronavirus outbreak has transformed the economic outlook and is expected to hit commercial property hard. In the near term, we expect transactions, which are already slowing, to collapse and property yields to spike, as uncertainty over …
22nd May 2020
Easing movement restrictions, combined with government support and strong underlying demand will allow housebuilding to bounce back fairly quickly. But weak occupier demand and falling capital values mean the recovery in commercial property construction …
15th May 2020
Before the virus outbreak, falls in prime retail rents were expected to be concentrated in Northern European markets. Now rental falls are likely to spread throughout Southern and Central Eastern Europe as well. The impact of the virus outbreak is highly …
14th May 2020
As a protracted economic recovery from the coronavirus crisis will force the Bank of England to keep interest rates close to zero and further expand its quantitative easing programme (QE), gilt yields will probably stay very low for many years. And …
Data from Europe suggest that the relationship between working from home and office space per worker is weak. And even if working from home becomes more prevalent in the next few years, we think that the most important driver of occupier demand will be …
11th May 2020
In light of the pandemic, our forecasts for developed market commercial property returns have been revised lower. Nevertheless, the relativities between the key markets are broadly unchanged, meaning that we still expect the US to outperform the UK and …
6th May 2020
Construction PMI slumps to record low April’s Construction PMI collapsed to a record low of just 8.2. That was driven by the commercial and residential sectors, which both saw record falls in activity. But looking ahead, with signs that housebuilders are …
Net lending rockets but expected to fall back in coming months The sharp rise in net lending figures in March was probably due to banks permitting payment holidays rather than a significant boost in new loans to investors. Given that these are likely to …
1st May 2020
Conditions expected to deteriorate further The Q1 RICS survey confirms fears for the outlook for property. Yet, while a sharp decline in both occupier and investment market conditions was reported, there was a marked deterioration in responses received …
30th April 2020
Early signs of the impact of COVID-19 on property were seen in the MSCI monthly data for March. While rental values did not see much of a deterioration, yields saw their biggest rise since after the EU Referendum in 2016, causing capital values to fall by …
29th April 2020
While there are fewer concerns that this property downturn could bring problems for lenders than during the GFC, financial risks remain, especially on the landlord side. In past recessions, occupiers and landlords have always suffered . Firms cut jobs or …
24th April 2020
Modest decline, but more to come While the decline in workload reported was modest, there was a marked worsening in responses received towards the end of the survey period. Indeed, with profit margins set to fall and lending likely to be tight, the …
23rd April 2020
Due to the spread of COVID-19, it is increasingly likely that investment activity will slump to a record low level in the second quarter. Even though we expect a pickup in the second half of the year, annual investment totals are still set to be around …
22nd April 2020
The latest monthly figures from MSCI confirm initial fears about the impact of COVID-19 on property. And this is only the start, figures for the coming months are likely to be worse still as the lockdown continues. As a result, we have revised down our …
17th April 2020
Mortgage lenders pull up the drawbridge Mortgage availability is set to collapse in Q2. Part of that will reflect limitations caused by physical distancing measures due to the coronavirus. Yet broader concerns about the economy, house prices and shrinking …
16th April 2020
Social distancing measures have accelerated the shift to online spending in recent weeks. But the upside of increased online spending is limited to a few occupiers, most notably supermarkets, and is unlikely to be sustained in the longer-term. Indeed, …
9th April 2020
Construction output grinding to a halt March’s Construction PMI fell to its lowest reading since 2009, with commercial construction seeing a particularly sharp fall. Housebuilding saw a more modest decline, but as revenues dry up over the next few months, …
6th April 2020
The rapid spread of coronavirus over the last month has dealt another body blow to UK retail. We expected the sector to see rental falls pre-COVID, but these could now be closer to 10% in 2020, leaving levels almost 20% below their mid-2018 high by the …
3rd April 2020
While COVID-19 will hit co-working hard, given the relative size of this subsector, we don’t think it will be large enough to impact rents in the overall office sector. WeWork has been gracing headlines again this past week as the co-working firm is …
2nd April 2020
The past relationship suggests that the recent 10% to 50% fall in real estate equity prices provide an indication of the direction values will move in the direct market, but not the likely extent of the falls. Over the past month, real estate equity …
1st April 2020
Net lending expected to weaken The improvement in net lending figures in February is unlikely to be sustained. Given that transactions are likely to grind to a halt as containment measures restrict most trading and that we expect capital values to fall by …
30th March 2020
The rise in yields in February suggests that even before the disruption from coronavirus worsened, investors had become more cautious. In the coming months, we expect this to hit transactions hard. As a result, yields are likely to rise at a faster pace …
27th March 2020
Property has generally been at the centre of the most severe economic downturns in recent decades. But this time it is different. Although we think the commercial market is likely to experience a sharp jolt in 2020, provided the spread of the virus can be …
26th March 2020
Our latest UK economic downgrades mean that it is now inevitable that there will be a big hit to commercial property values, which we expect to fall by around 10% this year. And while conditions are different to the GFC and the shock should be short and …
20th March 2020
In recent years, industrial rental growth for Rest of South East has exceeded growth in Rest of UK. We think that this has been driven by land constraints and changing occupier demand patterns, which are unlikely to change in the near future and will keep …
16th March 2020
The suspension of business rates for many retail, leisure and hospitality firms announced in the Budget is welcome, but unlikely to provide much relief to the retail sector. Indeed, the coronavirus will drag on the economy this year and the benefits of …
13th March 2020
Coronavirus-related market trauma has not only caused a correction in equity and oil prices, but also pushed UK bond yields to new lows. This has created the potential for lower property yields, but in the current uncertainty, we still think they are …
11th March 2020
The recent market meltdown reflects concerns about the economic impact of the COVID-19 virus. This will inevitably hit commercial property, but in our view, the downside is likely to be relatively modest. The spread of the coronavirus from Asia into …
6th March 2020
Sharp rise in construction output The IHS Markit/CIPS Construction PMI pointed to the strongest rise in construction since December 2018. This was driven by improvements in both commercial property and housing. But with the economic outlook weak and …
3rd March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
A rise in all-property yields caused capital values to decline by 3% y/y in January. Although we expect yields to rise and rents to edge lower in the months ahead, the rate of decline in capital values is set to slow later this year. Economic indicators …
Net lending remains unspectacular As expected, net property lending at the start of this year was relatively weak. The notable slowdown in lending to standing investment weighed on overall net lending to commercial property. We think a fall in capital …
