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How worried should property be about higher rates?

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 of a repeat of the last cycle. That being said, we continue to think that rising interest rates will limit capital value growth over the coming years.
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 Housing Market Data Response

S&P Global/CIPS Construction PMI (Mar.)

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 suggests that will continue in the near term but concerns about the outlook further ahead are mounting.

6 April 2022

UK Commercial Property Update

Will the London retail premium be reasserted?

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.

1 April 2022

UK Commercial Property Data Response

Lending to commercial property (Feb.)

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.

29 March 2022
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