UK Commercial Property
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Rental growth hits a three-year high

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 term, we suspect that property markets will struggle to maintain their current pace. Once this year’s rebound passes, we expect total returns to soften over the forecast period, as yields stabilise and structural changes within retail and offices weigh on rental growth.
Pieter Du Preez Property Economist
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Lending to commercial property (Oct.)

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 about the recovery will continue to weigh on lending in the near term.

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IPF Consensus Forecasts (Nov.)

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Valuations deteriorate as spreads narrow

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