Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
The latest Colliers/Real Estate Capital survey seems to confirm that strong investor interest is supporting the value of prime property relatively well, with poorer quality stock bearing the brunt of any price falls. Even so, with the recession apparently …
26th July 2012
Driven by higher yields, all-property capital values fell by 0.5% in June, the second successive decline of that magnitude. The cumulative price falls from October’s peak now stand at 2.1%. … Capital values fall a further 0.5% in …
25th July 2012
The latest RICS data suggest that, over the next six to nine months, developers anticipate the commercial property occupier market staying pretty flat. That is not unreasonable, but given that the economy is back in recession, downside risks to rental …
20th July 2012
Rumoured changes to the way in which the RPI is calculated may have a detrimental impact on the value of property with an index-linked lease. But even if any changes to the RPI are made, which is very far from certain, any effects on future property …
18th July 2012
In the first six months of 2012, all-property rental values have been surprisingly resilient to renewed recession, but the upward trend in yields that we had expected has become reality. On top of the 2% fall in capital values in H1, a further, largely …
17th July 2012
Despite a recent improvement in some near-term demand indicators, even the most optimistic forecaster in the consensus only expects nominal industrial rents to be 1% higher at end-2013 than they are now. The weight of evidence, however, suggests that …
12th July 2012
Simple calculations suggest that the rate of future rental growth implied by prevailing property yields is too low, or, in other words, that yields themselves may already have risen far enough. But this does not account for the likelihood that other …
10th July 2012
Today’s RICS survey showed that the apparent, slight improvement in commercial property occupier market conditions in Q1 did not last in Q2. Given the weak economic backdrop, this was little surprise. Looking ahead, given that GDP is unlikely to have …
5th July 2012
Prices in London’s prime property markets, especially residential, look very vulnerable to a major financial market shock, or anything that might undermine investors’ desire to use London property as a safe haven. Yet, if we are right, that the euro-zone …
4th July 2012
Net commercial property lending flows were negative again in May. That was the sixth consecutive month of negative net lending to the sector. And with the eurozone crisis affecting wholesale funding conditions, commercial property finance is likely to …
3rd July 2012
A composite indicator that aggregates up a range of individual balances from the CBI/PwC Financial Services survey points to continued, albeit modest growth in Central London office rents in H2. This is consistent with our current forecasts. But there has …
29th June 2012
The availability of credit in both the residential and commercial property markets fell in Q2. And because of tight wholesale funding conditions, surely related to problems in the euro-zone, lenders do not envisage any near-term loosening of credit …
28th June 2012
Official data show that UK investing institutions made further net purchases of property in Q1. Since then, however, Property Archive’s data show that these firms have become net sellers again. The upshot is that there is nothing here to suggest that the …
27th June 2012
All-property capital values fell by 0.5% in May, the seventh consecutive monthly fall. That raised the cumulative decline since October last year to 1.6%. With rents flat, the declines in capital values have been solely yield driven. And given that …
22nd June 2012
There was another strong rise in the number of financial and business services (FBS) sector jobs in Q1. Given the normal lags, and barring an economic meltdown, it seems almost certain that Central London office rents will rise further this year. However, …
20th June 2012
Strong interest in Central London office to residential conversions is not hard to understand, given that prime house prices command a substantial premium over office usage. But that premium looks vulnerable to a drop or a reversal of safe-haven flows …
15th June 2012
Property Archive’s data showed that, while overall commercial property investment market activity was solid in May, UK-based institutions were again net sellers. Historically, net disposals by institutions have been associated with falls in all-property …
12th June 2012
The slump in M&A activity in Q1 seems to echo other reports of increased occupier caution in recent weeks. For now, however, there is little sign that developers are scaling back their plans in response. … Construction PMI (May) and Mergers & …
6th June 2012
The euro-zone debt crisis has already had a significant impact on UK markets. Even so, we doubt that markets have fully priced in the likely economic effects that would stem from the partial breakup of the euro-zone that we anticipate will occur this …
1st June 2012
Leisure property will not be immune to the weak economy in 2012 but, over a three-year horizon, there is cause for optimism. Indeed, our upgraded forecast is that leisure total returns will average at least 7%y/y over 2012-14, comfortably above the …
31st May 2012
The commercial property sector saw further negative net lending flows in April. And given the weak economy and lenders’ still-high exposure to the sector, it is hard to see any improvement in lending flows on the horizon. … Lending to commercial …
30th May 2012
The latest IPF Consensus forecasts were little changed from February’s survey. Capital values are expected to drop by 4% to 5% this year. To our minds, however, the consensus is still a little too sanguine about the extent to which the weak economy will …
25th May 2012
All-property capital values edged lower in April and the annual rate of change has now dropped to minus 0.6%. A simple extrapolation from recent figures points to a fall in capital values for 2012 as a whole of 4%. But the weak economic outlook suggests …
24th May 2012
Not surprisingly, the latest De Montfort survey highlights lenders’ increased concern about the impact of the euro-zone’s plight on UK commercial property. But given the survey relates to 2011, this anxiety can only have got worse. All else equal, the …
18th May 2012
There have been no material changes to the outlook for the UK economy since the previous Analyst and with the double dip in capital values that we have been expecting now evident, we have not altered our commercial property forecasts. Yields remain on …
14th May 2012
The latest RICS data suggest that developers are still reasonably confident about the near-term prospects for commercial property occupier markets. However, with the economy now back in recession, we think it is only a matter of time before all-property …
11th May 2012
For the first time since mid-2009, IPD reported that in Q1 2012 yields on lower quality commercial property increased. Not least because of higher distressed loan work-outs, we would be very surprised if that marks the end of the increases in non-prime …
10th May 2012
In recent quarters, Central London office vacancy rates have edged higher and the amount of space under construction and set for completion over 2012-13 has risen. This is despite the lack of pre-lets. Meanwhile, the economy is back in recession. As such, …
4th May 2012
Net commercial property lending flows were very weak again in March, with the total for Q1 as a whole the worst on record. Clearly, this will do nothing to ease concerns about increased forced sales of property this year, nor the associated downside risks …
2nd May 2012
Despite the stability of rents in March, IPD all-property capital values fell by a further 0.3%m/m. That was the fifth consecutive decline. Admittedly, the cumulative falls in capital values since October have only been 0.8%. But the weak rental outlook, …
25th April 2012
The current situation, where IPD all-office yields are lower than all-retail yields, is almost unprecedented and, in our view, not sustainable. Consistent with this, our forecasts already envisage that the recent outperformance by offices will not be …
24th April 2012
Media reports suggest that high West End office rents have begun to push some tenants out of the area. To be fair, evidence that high relative rents cause widespread relocations across the capital’s office sectors is limited and the West End is very …
19th April 2012
Occupier demand for industrial property increased in Q1 and, given its low starting point, further gains in the near term can’t be ruled out. But the medium-term prospects for the manufacturing and external sectors remain subdued. Accordingly, we think …
17th April 2012
The stagnation of commercial property rents over the past two years is similar to the experience of the mid-1990s. But while the earlier episode laid the foundations for a sustained recovery, a repeat of that outcome today seems unlikely. First, the …
11th April 2012
The overall tone of the latest RICS survey was more positive than in the previous two to three quarters. However, this was not broad-based, only reflecting better results from the industrial sector. And given that the wider economy is set to remain weak, …
10th April 2012
In March, the commercial property component of the CIPS/Markit construction PMI rose to its highest level in four and a half years. But with wider economic conditions more likely to worsen than improve this year, we are wary of treating this as a sign of …
3rd April 2012
Positive results from the latest CBI/PwC Financial Services survey point to a modest rise in City and West End office rental values in 2012. But the improvement in financial services firms’ sentiment may overstate the extent to which the euro-zone’s …
2nd April 2012
The latest net lending data and Q1’s Credit Conditions survey confirm that the commercial property funding environment remains very difficult. Further negative net lending flows look more likely than not over the coming months, which will be an added …
29th March 2012
The most interesting aspect of the latest Colliers/Real Estate Capital (REC) property pricing survey was that it indicated a rise in prime yields in recent months. To the extent that this marks a turning point, the survey highlights that the risks to most …
28th March 2012
The Olympics are now only four months away and one obvious, potential beneficiary is the London hotel sector. But even if London hotels do receive a boost, this won’t disguise the weak demand fundamentals facing the UK hotel sector as a whole. Indeed, we …
27th March 2012
Official data show that institutions made net purchases of property in Q4. This contrasts starkly with the net sales recorded by Property Archive. But we suspect that this may just reflect timing issues. More generally, the data seem to suggest that …
23rd March 2012
A small increase in IPD all-property initial yields in February, coupled with the modest decline in rental values, pushed down capital values by 0.3%m/m. That was the third fall in a row and the largest decline since June 2009. Over the coming months, …
22nd March 2012
The number of workforce jobs in the financial and business services (FBS) sector rose strongly again in Q4 and, given the normal lags of six to nine months, this points to continued growth in Central London office rents this year. However, the new supply …
14th March 2012
Encouragingly, recent surveys suggest that there could be enough debt available this year to meet the UK commercial property market’s refinancing needs of perhaps £30bn to £35bn. But these estimates are not definitive. Lenders may well choose to hold back …
13th March 2012
Arguably, if the recent drop in commercial property investment market activity is primarily a function of a lack of stock for sale, it will have little bearing on the outlook for capital values. Yet to our minds, changes in investment flows broken down by …
8th March 2012
Merger and acquisition (M&A) activity in the UK strengthened a little in Q4, but remains subdued by past standards. At the margin, this will dampen Central London office occupier demand, adding to our concerns that a rental downturn will be seen in these …
6th March 2012
Unlike yesterday’s manufacturing sector survey, today’s PMI data reported that activity levels in the construction sector strengthened in February. Activity in the commercial property sector continues to lead the way, but there was also a rise in housing …
2nd March 2012
Although they will come as little surprise to market participants, the latest data from the Bank of England confirm that the availability of credit for commercial property transactions continued to deteriorate in the early weeks of 2012. It is hard to see …
29th February 2012
The recent improvement in both the timeliest economic news and sentiment towards the euro-zone has led investors to question whether the exceptionally low levels of gilt yields that were reached at the end of 2011 are now justified. We still see four …
27th February 2012
The brighter tone of some of the economic surveys of late has not been reflected in Consensus forecasts for commercial property. Respondents to the latest IPF survey have cut their forecasts for rental value growth, capital values and total returns both …
24th February 2012
