Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
The recent stabilisation in MSCI’s monthly measure of shopping centre rental value growth appears to reflect coverage issues rather than signs that an improvement is on the way. As such, we are comfortable with our forecast that rental value growth will …
7th October 2019
There has been a dramatic expansion in the co-working office sector globally over the last five years. As these operators use a different approach to traditional landlords, this brings new risks to office markets, though we feel it is probably too soon to …
2nd October 2019
Construction output set to drop in Q3 The fall in the headline construction PMI in September suggests that construction output contracted in Q3. For the commercial property sector, the softer supply pipeline may limit rental values falls. Meanwhile, we …
The rise in net lending unlikely to last August’s solid rise in net lending is unlikely to be sustained. Indeed, with capital values set to decline further in the months ahead, we expect that demand for credit will fall from its current levels this year. …
30th September 2019
In August, stronger rental value growth in the office and industrial sectors meant that annual all-property rental value growth held steady. (See Chart 1.) This is consistent with the recent improvement in economic activity, following the contraction in …
26th September 2019
The use of retail CVAs may have peaked. However, given that CVAs lower the overall market rent and that those retailers who have been subject to a CVA are still at risk of insolvency, we think that retail rental values have further to fall. Since early …
23rd September 2019
The divergence between Central London office rental value growth and vacancy rates appears to have reflected a combination of the rising share of take-up by flexible office providers and weak landlord bargaining power. This is consistent with our forecast …
16th September 2019
With job creation driven in part by self-employed workers, the recent resilience of the labour market appears to be less positive for occupier demand. What’s more, the weakness in economic activity and falling job vacancies suggest that office-based …
11th September 2019
Brexit heightens uncertainty, but retail remains the main drag The IPF Consensus forecast downgraded its forecasts for all-property total returns this year to 0.9% p.a.. Although the outcome of Brexit is likely to be an important driver of commercial …
6th September 2019
Construction continues to contract The decline in the headline construction PMI in August provides further evidence that construction activity has failed to recover so far in Q3. With firms cautious about the outlook, commercial property construction …
3rd September 2019
Net lending falls for first time in five months The decline in net lending in July is consistent with our view that net lending will be subdued over the rest of the year, as Brexit-related uncertainty and falling capital values weigh on credit demand. …
30th August 2019
Measures of covenant strength suggest that retail sector and West End office tenants are most at risk of default. With only a small share of these properties under-rented, this is consistent with our expectation that yields will increase the most for …
29th August 2019
Although there have been signs that economic activity has improved in Q3, the slowdown in the commercial property market looks set to continue. In July, all-property rental values barely grew and yields rose across most sub-sectors. (See Chart 1.) …
27th August 2019
After almost a decade of ultra-low interest rates and rising real estate valuations, concerns have been voiced about the outlook for property. In our view, these worries are not completely unfounded and returns are likely to moderate, but crash fears are, …
21st August 2019
In coming years, we think that increases in retail yields will cause all-property yields to rise, irrespective of our expectations for interest rates and the economy. However, further out, if all-property yields continue to be less responsive to changes …
20th August 2019
Overview – Regardless of the Brexit outcome, we expect all-property returns to be squeezed as a result of weakness in the retail sector. However, as Brexit could dramatically alter the near-term outlook for the economy and UK commercial property, we are …
15th August 2019
The global shift away from risky assets and towards safer ones that seems to be underway will either be exacerbated by a no deal Brexit on 31 st October or cushioned by a deal or a delay. Although a lot of bad news has already been priced into UK gilt …
12th August 2019
Weakness in investment activity is likely to extend into the rest of the year. Even if a Brexit deal is secured, we think that higher interest rates and stretched valuations, along with bleak rental value prospects in the retail sector, will put a …
6th August 2019
With valuations looking stretched and the rental value outlook weak, regardless of how the pound moves in response to Brexit, we do not expect a rebound in overseas demand for property. Our three Brexit scenarios, as outlined in the latest UK Economics …
30th July 2019
Net lending to slow over rest of 2019 The rise in net lending to real estate during June was unexpectedly strong. But with uncertainty high and capital values expected to fall further, we don’t expect the recent vigour to be maintained over the rest of …
29th July 2019
Occupier conditions decline for fifth consecutive quarter Weakness in the retail sector is expected to weigh on all-property rental values this year. However, surveyors do not expect the commercial property sector to experience a hard landing. The RICS …
25th July 2019
Our view that the commercial property downturn has further to run was backed up by a pickup in the pace of decline in all-property capital values in June. However, at the halfway point in the year, industrial returns continue to outperform returns on …
24th July 2019
Surveyors more positive about the outlook Although the improvement in workload expectations was encouraging, with Brexit uncertainty prolonged and commercial property values expected to fall, a strong increase in the development pipeline is unlikely. The …
18th July 2019
Credit availability eases in Q2 Lenders reported a drop in mortgage availability in Q2. And while that decline is expected to reverse in Q3, we doubt that will translate into a rebound in mortgage lending. Meanwhile, credit conditions for commercial real …
The July Financial Stability Report (FSR) noted weak foreign investment and sharp outflows from open-ended property funds as two key risks for commercial property this year. In fact, estimates of the sensitivity of property fund redemptions to price …
15th July 2019
We think that the all-property to bond yield spread will narrow from its current elevated levels, although this is not likely to happen before late 2020. But, structural changes mean that the property to bond yield spread won’t narrow to the early-1990s …
11th July 2019
Although there has been little clarity about Brexit, under any of our scenarios – deal, no deal or repeated delays – we think the economy is well placed for growth to pick up by 2021. In turn, although timings will differ, we expect the cumulative impact …
9th July 2019
Rise in net lending likely to prove temporary May’s increase in net lending is unlikely to be sustained. Indeed, with capital values expected to decline, we think that demand for credit will be subdued this year. Net lending by banks and building …
1st July 2019
The recent slowdown in logistics vehicle traffic is consistent with the softness of industrial take-up in the first quarter. Given the supply of industrial property is expected to increase this year, without a decent improvement in logistics vehicle …
28th June 2019
The downside risks to economic growth and property returns this year appear to be rising. Political and economic developments in May have increased the chance of a deterioration in global conditions and a no deal Brexit. Further, the falls in retail …
26th June 2019
Although weakness in occupier conditions in the West Midlands looks likely to weigh on Rest of UK office rental value growth in the near term, an improvement in the South West and less of a drag from rents in Scotland look set to push the Rest of UK …
19th June 2019
A high house price to rent ratio disadvantages the development of build-to-rent, relative to build-to-sell. And with capital values unlikely to grow as quickly as they have done in the past, total returns on residential property will not return to past …
17th June 2019
We think that lower demand for credit as capital values fall will have a larger impact on property lending than higher interest rates because it appears that borrowers will remain comfortable servicing their debt. … Higher interest rates not likely to …
11th June 2019
Although retail demand has improved, the oversupply of property is expected to hold down retail rents for some time. But the speed of adjustment to the ‘new norm’ of retail stock could differ across regions. … How might supply affect regional retail …
6th June 2019
Although the rise in office space under construction reported by the summer London Crane Survey highlighted that developers continue to have confidence in the market, other surveys of construction and development suggest that space under construction is …
4th June 2019
The downgrade to the IPF Consensus forecast for all-property total returns this year to 1.8% y/y, mainly reflected a weaker outlook for the retail sector. Although our forecasts are similar this year, we less optimistic than the IPF in 2020 and 2021. …
31st May 2019
April saw a sharp reversal of the large increase in net lending in March. With uncertainty prolonged and yields starting to rise, we think that net lending will be subdued this year. … Lending to commercial property …
UK commercial property sector returns continued to soften in April, with the delay to Brexit prolonging investor uncertainty and property yields increasing further, particularly in the retail sector. … Retail returns …
24th May 2019
The weakness in April’s investment data reinforces the downward underlying trend in activity. Indeed, with uncertainty prolonged and pricing concerns apparent, particularly in the retail sector, we think that investment activity could soften further this …
21st May 2019
Although bond yields have fallen, property yields have edged higher and we expect this divergence to continue this year as uncertainty has been prolonged and as concerns over rental growth prospects, particularly in the retail sector, intensify. … Lower …
16th May 2019
For the remainder of this year UK assets will probably be buffeted by global trends, resulting in UK equity prices falling by about 10%, 10-year gilt yields declining from 1.05% to around 1.00% and the pound weakening from $1.29 to about $1.25. But if a …
15th May 2019
The recent strength of alternative investment does not appear to reflect a broadening in the investor base, but with interest rates unlikely to rise until next year, we think that a continuation of the search for yield will mean that alternative …
14th May 2019
With Brexit delayed, occupier demand is likely to be soft this year and interest rates lower for longer. However, our working assumption is that a deal will be struck this year. In turn, we expect the outward shift in property yields, which has already …
10th May 2019
Workloads deteriorated further in Q1, although some improvement is expected. But with labour and finance constraining activity, commercial property supply is unlikely to increase substantially. … RICS Construction Market Survey …
2nd May 2019
A strong increase in net lending in March boosted the Q1 total but we think that concerns about property values, particularly in the retail sector, will prevent a sustained rise in net lending this year. … Lending to commercial property …
1st May 2019
There are no signs that supermarket rental value falls will reverse. But supermarket capital value growth is likely to outpace the wider retail sector in coming years as valuations appear less stretched. … Supermarkets to outperform the wider retail …
30th April 2019
Recent developments suggest that UK GDP growth will be lower for a bit longer. As such, with interest rates unlikely to rise as quickly, bond yields should put less upward pressure on property yields this year. … UK interest rates lower for …
26th April 2019
The RICS survey showed no improvement in occupier demand conditions and investment enquires worsening, consistent with the property market slowing further. … RICS Commercial Property Market Survey …
25th April 2019
There was an unexpected loosening in credit conditions at the start of the year. But with no let-up in economic uncertainty and continued gloom about the outlook for housing, we expected this will be temporary. … Bank of England Credit Conditions Survey …
18th April 2019
The improvement in investment activity in March was mostly driven by a one-off deal and with economic and political uncertainty to continue for longer, we do not expect to see a sustained pick up in investment activity this year. … Commercial property …
16th April 2019
