Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
Capital growth was solid in April at 0.5% m/m, although that reflected a slight reduction from the rate seen in March. Looking ahead, we expect the recovery in economic activity to continue which will support demand for commercial property. However, …
28th May 2021
Our forecasts that the Bank of England won’t tighten monetary policy until much later than the markets expect and that when it does it will unwind some quantitative easing (QE) first (perhaps in 2024) before raising interest rates (perhaps in 2025) is …
24th May 2021
Overview – The easing of restrictions is good news for the economy, but some commercial property sectors will be slower to benefit than others. Encouragingly, the property downturn was not as bad as we anticipated and the data for Q1 suggest that we may …
21st May 2021
Retail has been the hardest hit of the major sectors during the pandemic, though hope is returning with the re-opening of economies. But new challenges are emerging. In particular, we think that more home working will divert (already-weak) instore retail …
18th May 2021
After a marked rise in gilt yields and a fall in real estate yields, property looked relatively more expensive in Q1 than in Q4. Despite this, property sectors still look either undervalued or fairly valued on our measure, except for the industrial sector …
13th May 2021
Construction activity stays strong, though growing signs of cost pressures Strong demand for new projects brought further growth in output during April, according to the latest construction PMIs. But there is also growing evidence of cost pressures, …
7th May 2021
Construction recovery well underway as optimism builds The RICS Construction Survey points to a rise in output at the start of this year, with the highest workload reading since Q1 2016. Looking ahead, respondents are more optimistic about the outlook but …
6th May 2021
More working from home will inevitably change cities as we know them. However, cities are more than just workers. This means that cities where a higher share of jobs can be done remotely are not necessarily the ones where the impact of remote working on …
5th May 2021
Second consecutive rise in net lending but lenders to act cautiously We think the extension of payment holidays boosted net lending again in March. But as the economy bounces back in H2, lenders are less likely to allow for these concessions and we expect …
4th May 2021
After a 20% y/y fall in 2020, we think the economic recovery in H2 and some pent-up demand will support an improvement in investment activity this year. Though we estimate that totals will rise by 25% y/y to £50bn this year, this would still make it a …
30th April 2021
Surveyors less downbeat about office and retail, more bullish on industrial The Q1 RICS survey showed that while occupier demand continued to fall, investment enquiries picked up, mostly due to rising industrial activity. Looking ahead, surveyors are less …
29th April 2021
Although last year probably marked a low point for lending towards commercial property, we expect the recovery will be subdued this year. After all, lenders have indicated that the availability of credit will remain weak in the coming months and a slow …
23rd April 2021
A turnaround in returns during March hinted at a brighter outlook, though this mainly reflected favourable base effects. We think both structural and cyclical headwinds remain and do not see this as the start of a sustained recovery. With restrictions …
21st April 2021
Confirmation banks’ risk appetite is returning Robust house price growth and the prospect of a strong economic recovery have caused banks’ risk appetite to return. As a result, banks expect to increase the availability of high LTV loans and reduce …
15th April 2021
At face value, news of a marked rise in industrial completions this year should imply that rents may come under pressure soon. However, we expect strong occupier demand and the limited amount of speculative space to support rental growth in the sector. In …
14th April 2021
Strongest growth in construction activity since 2014 A broad-based strengthening in construction activity pushed up the construction PMI to a six-and-a-half-year high in March. Strong housing and logistics development will continue to support …
8th April 2021
While investment in build-to-rent developments has been notably resilient over the past year, we continue to think that the growth of the sector will be slow for two reasons. First, high house prices relative to rents means that build-to-rent investors …
7th April 2021
Though retail warehouse rents saw their largest ever annual fall in 2020, this drop was not as deep as in other retail sub-sectors. Looking ahead, while a higher level of remote working than before the pandemic is likely to continue supporting out-of-town …
1st April 2021
Net lending to turn negative again despite February’s rise The increase in February’s net lending total was the first rise since September last year. We think this can be explained by the extension of payment holidays rather than a rise in new loans. …
29th March 2021
With office occupiers cutting space requirements, London office vacancy has climbed sharply. Our estimates suggest that vacancy is likely to rise even further over the next year or so and we have revised down our rental forecasts as a result. With tenants …
26th March 2021
Thanks to changing consumption patterns and structural and cyclical knocks to the traditional property sectors, both occupier and investor demand for data centres set new records last year. But, while further strong growth is likely, we don’t expect these …
19th March 2021
After stabilising at the start of the year, all-property capital values grew slightly in February. But we don’t think this spells the start of a sustained recovery over the next few months. After all, virus restrictions are only expected to unwind …
18th March 2021
Given that the natural vacancy rate (NVR) provides a better gauge of office market conditions than the absolute vacancy rate, we set out to estimate the NVR across European office markets. Future market conditions implied by our NVR estimates are broadly …
11th March 2021
Despite the lockdown, a recent pick-up in footfall suggests that people are returning to the capital, which, if it continues as non-essential stores re-open, would be welcome news for London’s hard-hit retailers. But we think a slow return of office …
10th March 2021
We think the recent jump in bond yields will not continue and, though we think that they are unlikely to drop back to their previous lows, supportive valuations against bonds will limit upward pressure on commercial property yields. As seen in other …
8th March 2021
Construction sector’s strong innings resumes after rain delay The rebound in the construction PMI in February suggests that the dip in activity in January was due to heavy rainfall rather than any deterioration in demand. While residential activity …
4th March 2021
While most governments are focussed squarely on maintaining or increasing fiscal support for their economies, in today’s Budget the Chancellor, Rishi Sunak, adopted a different two-staged plan for the UK – spend big for the next two years and tax big for …
3rd March 2021
Weak start to the year Net lending remained negative in January and we think this is explained by weak transactions and renewed UK lockdown. Looking ahead, any recovery in lending to commercial property is likely to be slow. After all, the weak near-term …
1st March 2021
In light of our latest long-term economic and financial market forecasts, we have revisited our views for commercial property performance over the next three decades. We think that average returns will be lower than in the recent past, but that property …
Consensus more optimistic after this year Though February’s IPF Consensus Forecasts were upgraded for 2021, we remain somewhat more upbeat on UK commercial property performance. Further ahead, our gloomier view for the office sector means that we expect …
26th February 2021
The rise in all-property capital values in late-2020 proved short-lived and they flattened off again in January. The recent roadmap for easing England’s current lockdown is broadly consistent with our previous expectations for the recovery, so the outlook …
25th February 2021
Overview – Effective vaccines provide a path out of the COVID-19 economic slump, but commercial property will be slow to benefit. On the bright side, the real estate downturn has been milder than expected and we appear to be past the worst. But we think …
19th February 2021
UK assets are well placed to shake off their underperformance since the 2016 Brexit vote by outperforming global assets over the next couple of years. All risky assets will continue to be buoyed by the combination of a rapid global economic recovery from …
15th February 2021
The spread of performance between UK commercial property sectors hit an all-time high in 2020, with retail spiralling into a GFC-like slump, while industrial barely flinched. This gap will narrow, but not disappear, weighing on the strength of the …
11th February 2021
Please see PDF for full publication Property valuations improved in Q4, after they stabilised in the previous quarter. This was largely on the back of the vaccine announcements, which drove a recovery in equity prices and lowered dividend yields. As a …
9th February 2021
In our Future of Property research, we identified important post-pandemic shifts in most real estate sectors. How these trends interact will be key to the outlook for the urban locations where most real estate is clustered. We think it is premature to …
4th February 2021
Further signs of optimism about construction activity this year The Q4 data showed a first rise in reported construction workloads since Q4 2019, albeit a modest one. With expectations more upbeat too, this could suggest activity has turned a corner. But …
Star performance starts to fade The construction industry outperformed the rest of the economy in 2020 by being the first and only sector to see output recover to its pre-virus level. But the unexpected dip in the construction PMI in January suggests that …
Negative net lending likely to continue in the near-term In line with our expectations, net lending was negative again in December and we expect it to remain so in the coming months. After all, we think a weaker near-term economic outlook will restrict …
1st February 2021
The final few months of MSCI monthly data for 2020 suggest that the fall in capital values last year was not as bad as we anticipated. But we still think a prolonged period of tight restrictions and the end of the eviction ban will mean that values fall …
29th January 2021
Apart from industrial, the outlook for property values remains poor The RICS survey for Q4 showed that occupier demand and investment enquiries continued to fall. Though there was a slight improvement on Q3, this was largely due to the industrial sector. …
28th January 2021
A return to rental growth and stronger capital value growth in December hint to a turnaround in UK commercial property. But this was a surprising development and we think it is too early to call the recovery given the headwinds in early 2021. With virus …
22nd January 2021
Strong demand allows banks to maintain stringent lending standards Very strong demand allowed banks to maintain tight lending standards in Q4 2020 while still increasing mortgage lending volumes. Of course, buyer demand is likely to drop sharply when the …
21st January 2021
Although rental growth prospects for prime property are weak compared to recent years, the outlook is better than for secondary property. As such, we think that investors will continue to focus on prime assets this year, allowing prime office and …
18th January 2021
After hitting a decade-low in 2020, we think that commercial property returns will turn positive in 2021, but any improvement is likely to be modest. This reflects the delayed recovery in the economy following tougher restrictions in Q1 and continued …
11th January 2021
Construction continues to recover…for now The seventh consecutive construction PMI reading of over 50 in December mainly reflected a continued strong recovery in housing activity. The rebound in construction of commercial property has already all but …
7th January 2021
The pandemic – and the associated increase in working from home – may cause a fundamental shift in the way that cities function in future. But this shift will not necessarily trigger a more fundamental economic decline in the world’s largest urban …
5th January 2021
Negative net lending likely to continue in the coming months Consistent with soft investment activity and a return to more regular loan repayments, net lending was negative for the second consecutive month in November. Looking ahead, we think a weaker …
4th January 2021
Despite all the current gloom about COVID-19, the outlook for next year has been brightened by the vaccination programme. While we don’t think this will be enough to prevent further falls in capital values, property transactions should benefit, though any …
23rd December 2020
Rental falls slowed and capital values returned to growth in November, suggesting that we may be too pessimistic in predicting further falls in values. But, with tight virus restrictions remaining and structural shifts weighing on the rental outlook, we …
18th December 2020
