Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
Rising interest rates have put the outlook for property prices back under the spotlight. But, with lending practices much more restrained in this cycle and the market level loan-to-value ratio well below 50%, we don’t feel overly concerned at the prospect …
7th April 2022
PMI results mixed, with more concern on the horizon The continued strength of the construction PMI in March suggests that activity in the sector increased despite ongoing headwinds from supply constraints and cost inflation. The rise in new orders …
6th April 2022
The rental growth premium enjoyed by Central London shops has disappeared in the pandemic. And we don’t expect it to reopen, as lower footfall in the capital, the slow recovery in tourist arrivals and higher vacancy rates weigh on rental growth. All …
1st April 2022
Modest net lending set to continue Net lending to property eased further in February, though it remained in positive territory. We expect lending trends to remain fairly subdued as both economic and sector specific challenges loom over the coming months. …
29th March 2022
We think that property markets are the weak link when it comes to the impact of tightening monetary policy. A modest rise in interest rates might only cause price falls in a few obvious candidates. But rates might have to rise only a bit further than we …
25th March 2022
The latest data from the industrial sector were predictably upbeat with strong take-up and dwindling supply driving rapid rental growth. There were also signs of important shifts across UK markets that we think may be significant enough to re-cast our …
The Chancellor, Rishi Sunak, provided more support to the economy than we had expected over the next few years in today’s Spring Fiscal Statement, but he could have gone further in 2022/23. Instead, he chose to bank some extra cash so there’s scope for …
23rd March 2022
Shopping centres were the hardest hit commercial property sector during the pandemic. The latest data hint that the sector may be past the worst. But the outlook remains clouded by the threat of online shopping and weak in-store retail spending. …
Commercial property is not showing any signs of slowing down. Rental growth rose further in February, while annual total returns climbed to a level last seen in Q4 2010. Industrial remains the main driver behind overall performance, with retail also …
18th March 2022
The Chancellor, Rishi Sunak, will use his Spring Statement on 23 rd March to soften the blow for households facing rising energy and food costs. However, any hopes that he will announce a big handout may be disappointed as he tries to strike a balance …
16th March 2022
At the start of the Ukraine crisis, we felt the direct property impact would be modest, based on limited Russian ownership and capital flows. But as the conflict extends into a third week, concerns have risen about the macroeconomic impacts of the …
11th March 2022
The South East jobs market turned a corner during the second half of 2021. But while occupier activity has picked up, vacancy has also risen. As a result of this, and the effects of economic headwinds and remote working, we only expect to see modest …
10th March 2022
PMI rises further as housing activity accelerates The construction PMI rose to its highest level in eleven months in February. Although encouraging, supply constraints remain a major impediment and input costs high, which we think will limit growth in the …
4th March 2022
Net lending starts year on softer note Net lending to property fell back in January, after reaching its highest level in 18 months in December. But overall net lending remained in positive territory, though we expect a number of challenges to limit any …
1st March 2022
Industrial steers better outlook for 2022 returns The latest IPF Consensus Survey suggests that commercial property will have a better year than initially thought. Our total returns forecast for 2022 is in line with that of consensus, but beyond this year …
25th February 2022
Much has been made of UK property’s openness to Russian money following the invasion of Ukraine. But since the depreciation of the Russian ruble in 2014, Russians have become far less important to demand. As a result, we think the effects on UK property …
Our forecast that lingering price pressures will prompt the Bank of England to raise interest rates from 0.50% now to a peak of 2.00% next year suggests there is little scope for market interest rate expectations to rise further. Even so, we think that an …
24th February 2022
Overview – The worst of the Omicron wave appears to have passed and we expect growth to rebound later this year, albeit weighed down by weak consumer income growth. But persistently high inflation is now set to bring a concerted tightening in Base Rate, …
18th February 2022
The exceptionally strong rebound in commercial property returns has been clear from the middle of last year. While this came earlier than most expected, we think it reflected special conditions and won’t last. Despite increased uncertainty from the …
11th February 2022
Property valuations, compared to bonds and equities, deteriorated for a fourth consecutive quarter in Q4. The spread between the asset classes narrowed as the magnitude of the fall in all-property yields outweighed marginal downward moves in gilt and …
9th February 2022
PMI bounces back in January with commercial activity at the helm In contrast to the decline at the end of last year, the construction PMI rose to its highest level in six months in January. There were also encouraging signs that supply and cost issues …
4th February 2022
Economic headwinds and shortages to weigh on activity in the near term The latest RICS survey indicated that activity in Q4 and the outlook for the short term were broadly unchanged. The survey also suggested that labour and material shortages will …
3rd February 2022
Net lending defies Omicron fears in December A marked jump in lending to standing property resulted in total net lending reaching its highest level in just over 18 months in December. Although this is encouraging, several challenges remain during the …
1st February 2022
There is a perception that a shift in workspace preferences brought about by the pandemic has redirected demand towards higher quality office space. But while there is some evidence of a flight to quality in Central London office data, the evidence is …
28th January 2022
Omicron deals a blow to office and retail demand, while industrial surges The spread of the Omicron variant took some of the steam out of the property recovery in Q4 2021, but the latest RICS results are consistent with further growth in 2022. They also …
27th January 2022
#Commercial property ended last year strongly. Annual rental growth climbed to a five-year high, while annual total returns crossed the 20% level. This was largely the result of dynamism in industrial, though all sectors saw positive annual returns, even …
21st January 2022
The industrial sector had its best year in over three decades in 2021 as demand soared and supply struggled to keep up. Although we expect the sector to perform well again this year, we don’t think that yields can continue to fall at the rate seen in …
20th January 2022
Real estate potentially has a significant role to play in helping achieve ambitious climate targets. We have estimated the size of the risks in the transition to net zero for the commercial property markets that we cover. This risk varies widely across …
14th January 2022
Recent data have reinforced concerns about inflation risks in the UK. We remain of the view that property investments provide only limited long-term protection against higher prices, but of the individual asset types, we think industrial and residential …
Credit availability to remain good, but mortgage rates to rise The Q4 credit conditions survey suggests that, while credit conditions will remain loose, scope for lenders to absorb further increases in interest rates into their margins has run out. A …
13th January 2022
The performance of commercial property exceeded expectations in 2021, with a particularly strong contribution from the industrial sector. But we don’t think that this momentum will last into this year, with high inflation and four interest rate hikes in …
7th January 2022
PMI dips as Omicron and supply constraints take hold The construction PMI declined last month to end the year on a negative note, more than erasing the gain made in November. Despite tentative signs that they are starting to ease, we expect labour and …
Net lending reverses course as uncertainty grows Declines in lending for both standing property and new developments resulted in total net lending moving back into negative territory in November. The outlook is for credit conditions to remain tight in the …
4th January 2022
The recent sale of a 25% share of the Bluewater shopping centre has provided further evidence of the slump in retail values. And while there are signs that the worst of the correction may now be over, we don’t think that a turnaround is likely soon. The …
24th December 2021
International travel restrictions and domestic containment measures have dealt the hotel sector a massive blow over the last two years. The outlook for the sector is more positive, but a slow relaxation of restrictions, tourist hesitancy and reduced …
22nd December 2021
The rapid bounce-back in the US economy along with still-loose monetary policy will drive continued strong performance in real estate in 2022, when we expect returns to exceed 12%. That would see the US outperform the UK and euro-zone by 5%-pts and 3%-pts …
15th December 2021
Investment activity has bounced back sharply after the initial COVID-19 shock and is on track to hit a three-year high in 2021. But we expect more modest growth in 2022 as softer economic activity and structural factors in some sectors weigh on …
Office space under construction declined for a third consecutive quarter according to the Winter London Crane Survey, despite an uptick in new starts. Given the challenges the office sector faces, we believe that activity is likely to decrease even …
10th December 2021
The Omicron variant has heightened the near-term risks for both the economy and UK commercial property. The latest restrictions show that there is still considerable uncertainty, but our estimates suggest that the downside is limited and the sector should …
9th December 2021
PMI points to improvement, as constraints fade slightly The construction PMI rose for a second-consecutive month in October, to its highest level since July. However, we expect continued labour and supply shortages to hamper output in the near term. While …
6th December 2021
Commercial property’s recent good run continued in October. The annual rate of rental growth surged ahead after only breaching positive territory for the first time in almost two years during August. However, given the economy’s headwinds over the near …
3rd December 2021
Development activity rises sharply in October A drop in repayments and rise in development activity resulted in positive net lending in October for the first time since March. Despite this turnaround, credit conditions will remain tight and uncertainty …
29th November 2021
More upgrades to the consensus view, but heavily driven by 2021 The resilience of the commercial property market has led to further upgrades to the IPF Consensus view for this year, albeit still below our forecast. Beyond this year, we are more downbeat …
26th November 2021
Over the last two years, serviced offices have seen more upheaval than most other real estate sectors. But there have been some encouraging signs over recent quarters and long-term trends may have moved in their favour, though we don’t expect improved …
25th November 2021
Although the economic backdrop has recently become less favourable for UK asset prices, we expect that the economic recovery will regain some vigour in the second half of next year, that CPI inflation will fall close to the 2.0% target in late 2022 and …
22nd November 2021
Overview – The economic recovery has stalled and the near-term outlook is softer. Meanwhile, higher inflation is expected to bring interest rate hikes as early as December 2021, though we think that the pace of tightening will be fairly gradual. The …
19th November 2021
Compared to bonds and equities, property valuations deteriorated further in Q3. This was due to a combination of a fall in property yields on the one side and a rise in both bond and equity yields on the other. Although we expect a less dramatic fall in …
12th November 2021
The latest real estate data came in stronger than expected. But while there have been encouraging developments, particularly in the retail sector, we think this signals a short-term boost to prospects rather than a permanent improvement. The further …
11th November 2021
Shortages continue to threaten recovery The latest RICS survey indicated that construction activity remained robust in Q3, while the outlook for the near term is favourable. Although we agree, we expect that building material and labour shortages, along …
4th November 2021
A modest improvement, but supply issues continue to bite Construction firms reported that activity strengthened in October despite higher costs and continued difficulty sourcing materials. The big picture is that until those constraints ease construction …
