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RICS Commercial Property Market Survey (Q4)

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 highlight continued deep divisions in sectoral performance, with industrial booming and retail languishing.
Pieter Du Preez Property Economist
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UK Commercial Property Update

Student accommodation rent growth to stay solid

Student enrolment remained robust during the last couple of years and is likely to continue growing strongly over the next decade. But supply of purpose-built beds has grown less rapidly and the pipeline points to a continued lag against demand. This demand-supply imbalance will likely support solid rent growth over the coming years.

24 June 2022

UK Commercial Property Chart Book

Signs of a slowdown emerging

Annual all-property rental growth reached a five-year high in May, while returns rose to levels last seen in mid-1994. But signs of a slowdown also emerged, especially in the red-hot industrial sector, where capital value growth and total returns eased for the first time in almost two years. In addition, the recovery in retail and offices lost some steam, with monthly rental growth rates nudging lower. We expect the pace of growth will let up soon as yields start to stabilise and structural changes weigh on occupier demand. As such, we expect returns to cool to below 10% by end-2022.

22 June 2022

UK Commercial Property Update

Will Manchester office rental growth outperform again?

After a more severe downturn in 2020, Manchester office rental growth has caught up with other regional cities in recent quarters. While employment growth and occupier activity may remain fairly weak, tight new supply dynamics should see Manchester office rents rising broadly in line with the average of other regional offices over the short term.

17 June 2022

More from Pieter Du Preez

UK Commercial Property Chart Book

Annual property returns hit a seven-year high

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 retail. But we think it will be a struggle to repeat this stellar performance in 2022, as economic headwinds and structural changes weigh on rental growth and the scope for further yield reductions reduces. As a result, we expect returns to be significantly lower in 2022.

21 January 2022

UK Commercial Property Update

Industrial yield falls set to slow

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 2021.

20 January 2022

UK Commercial Property Update

Returns to cool significantly in 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 2022 expected to weigh on the outlook.

7 January 2022
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