Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
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
Recovery in construction waning The fall in the headline construction PMI to its lowest level since May shows that the recovery in activity was waning even before the second lockdown began. Admittedly, construction sites will remain open this time around. …
Commercial property transactions are likely to end the year around 40% down on 2019 totals. And with the prospect of an extended lockdown this winter, a slower economic recovery and falling capital values, this will weigh on transactions well into 2021. …
3rd November 2020
Outlook for offices and retail remains poor, while industrial shines Despite surveyors reporting a rise in industrial occupier demand in Q3, conditions for the retail and office sectors were still poor. In turn, expectations for all-property rental and …
29th October 2020
Rise in net lending to be short lived Having revised up figures for August, net lending rose for the second consecutive month in September. We think this can be explained by a pick-up in investment activity, but we think a deterioration in the economic …
Recent developments point to a weaker short-term economic outlook in the UK. In our view, this will weigh most heavily on next year’s office sector recovery and suggests that the turnaround that we expected in all-property capital values is now in the …
28th October 2020
A faster deterioration in office rents meant that all-property rental values fell at a quicker pace in September. As a result, with yields stable, all-property capital values declined less steeply. But with the rental outlook worsening amidst further …
23rd October 2020
An abrupt U-turn on workers returning to their offices last month signalled that the virus will continue to dominate lives in the UK into next year. In fact, we think office working may never quite be the same. As more remote working could reduce space …
19th October 2020
In the current environment, bank lending to property will likely stay weak. Moreover, falling values are expected to lead to an estimated £30bn re-financing gap in the coming years, which will put pressure on investors to find other forms of finance or …
16th October 2020
Banks maintain property lending caution Mortgage availability saw a modest improvement Q3, but not enough to reverse the large fall seen in Q2. Meanwhile, credit availability to commercial property fell sharply during the quarter, and lenders expect to …
15th October 2020
Along with difficulty in conducting viewings, London’s hard-hit hospitality and leisure sectors meant that there was a sharp fall in multi-let industrial take-up in H1. While availability is likely to rise further in the coming months on the back of …
9th October 2020
Retail has been hit hard by the COVID-19 crisis and lasting changes to online spending will bring further pain. While our estimates suggest that the impact is likely to be less severe than structural change in offices, the rental outlook is expected to …
8th October 2020
Construction growth edges up in September The construction PMI strengthened in September, driven by an improvement in both the commercial and residential sectors. Still, with fresh virus restrictions likely to hit commercial occupier demand further, …
6th October 2020
The resurgence in virus cases in the UK has led the government to reverse its advice on returning to the office. Given that many workers continued to work from home anyway, the impact of this change in policy is likely to be limited. That said, the new …
2nd October 2020
While we continue to think that this year’s property downturn will be milder than in past cycles, next year’s recovery is looking more fragile. This in part reflects revisions to our economic view, but also structural changes which are weighing on the …
1st October 2020
As the differences between a Brexit deal and a no deal are not as big as they once were, the economic costs of a no deal have diminished. The bigger risk is that relations between the UK and the EU deteriorate to such an extent that both sides start to …
Net lending likely to turn negative again Having fallen sharply in July, net lending to property was practically flat in August. As the recovery in transaction activity show signs of slowing and banks are less willing to grant further payment holidays, we …
29th September 2020
Though the slowdown in the pace of rental and capital value falls in recent months seems to suggest that pricing is stabilising, we expect there will be further upward pressure on yields this year. After all, the rental outlook has deteriorated. And with …
25th September 2020
News that the government has extended the ban on commercial property evictions will be welcomed by tenants, especially in the hard-hit retail and hospitality sectors. But, already facing high levels of rent arrears, this will be a further strain on …
22nd September 2020
Our analysis suggests that UK commercial property is fairly valued when compared to the pricing of alternative assets. However, with that finding based on the assumption that current income streams are sustained, we think that it is unlikely to provide …
18th September 2020
Shopping centres are likely to suffer in the near term as people avoid enclosed spaces, shop more online and as retailers continue to go bust or consolidate space. Since mid-2018, rents have deteriorated fastest in larger centres, and we think this trend …
10th September 2020
Even after the immediate threat of COVID has receded, we expect as many as 50% of office-based employees will work from home at least once a week. But the move away from cities and toward the suburbs should prove short-lived. Most of those leaving cities …
9th September 2020
Deterioration in the outlook for next year The latest IPF Consensus Forecasts were revised down over the forecast horizon, with notable downgrades to next year’s outlook. Our views are broadly in line with the IPF in terms of sector rankings, but we take …
4th September 2020
Residential recovery outpaces commercial While the recovery in both commercial and residential construction lost momentum in August, growth in housebuilding far outperformed commercial. This trend is likely to continue, reflecting the stronger outlook for …
Negative net lending expected to continue in coming months In line with our expectations, net lending to property saw a marked decline in July as transactions remained low and banks tightened their belts. We expect banks’ willingness to grant further …
1st September 2020
The impact of the pandemic on property has superseded that of Brexit, but that’s not to say that Brexit risks can or should be fully discounted. While we expect a slim deal to be agreed this year, we don’t envisage it having a notable upside effect on …
28th August 2020
