Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
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
Office completions are set to rise again in Central London next year. We think this will mark the peak for this development cycle in London though, as an increase in remote working will dim the outlook for occupier demand, weighing on development starts …
16th December 2020
With open-ended funds gated for much of the year, net outflows have not been as high as in recent years. But net outflows have picked up pace in recent months and we think this will continue as a result of the increased risk of a no deal Brexit in the …
11th December 2020
The confirmation of an effective vaccine in recent weeks has improved the economic outlook. But rising unemployment, a higher exposure to smaller retailers and ongoing travel restrictions will result in standard shop rents continuing to fall next year. …
8th December 2020
No double dip in construction The rise in the headline construction PMI in November showed that the industry continued to recover even as overall economic activity probably contracted again. But builders’ optimism that this will continue for the …
4th December 2020
News about a vaccine has boosted financial markets and we have revised up our global economic expectations for the next two years or so. But while we think that this bodes well for the medium term, next year is still likely to be tough for most property …
2nd December 2020
With rental and capital values falling at a slower pace in recent months, this had seemed to suggest that pricing was bottoming out. But the near-term outlook for most commercial property sectors has been dampened further by the second lockdown. We expect …
30th November 2020
Net lending likely to remain negative in coming months Net lending turned negative in October. We think this can be explained by weaker investment activity and a return to more regular loan repayments after earlier payment holidays. Looking ahead, we …
Outlook for 2021 deteriorates The latest IPF Consensus Forecast saw a marked downgrade to next year’s outlook. Although we expect values to decline next year too, we are less pessimistic when it comes to the size of those falls. Further ahead, our …
27th November 2020
After having been hit particularly hard during the COVID-19 crisis, UK assets are well placed to perform much better now that COVID-19 vaccines are brightening the economic outlook. Indeed, the combination of a decent economic recovery and continued …
24th November 2020
Overview – The outlook for most commercial property sectors was already fragile and this has only been dampened by the second lockdown. Although transactions are set to pick up next year, we think property yields will edge higher and that all-property …
20th November 2020
Virus-driven behaviour changes that support a faster online transition will boost industrial demand over the coming years. But we don’t believe the view that higher online spending will cause rents to detach permanently from the underlying strength of the …
19th November 2020
Third quarter data make it look increasingly likely that our year-end price forecasts will prove to be too negative. However, with the UK still on course for a capital value fall of close to 10% this year, this doesn’t necessarily mean that the US or …
12th November 2020
Property valuations stabilised in Q3, on the back of a marked improvement in Q2. This meant that, apart from industrial, all sectors looked either undervalued or fairly valued by our measure. However, with income streams highly uncertain in the near term, …
11th November 2020
Upbeat expectations to be short-lived While the RICS Construction Survey still points to a small decline in output in Q3, there was a marked improvement in the share of surveyors reporting a fall in construction workload. Expectations have become more …
5th November 2020
