Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
The latest net lending data and Q1’s Credit Conditions survey confirm that the commercial property funding environment remains very difficult. Further negative net lending flows look more likely than not over the coming months, which will be an added …
29th March 2012
The most interesting aspect of the latest Colliers/Real Estate Capital (REC) property pricing survey was that it indicated a rise in prime yields in recent months. To the extent that this marks a turning point, the survey highlights that the risks to most …
28th March 2012
The Olympics are now only four months away and one obvious, potential beneficiary is the London hotel sector. But even if London hotels do receive a boost, this won’t disguise the weak demand fundamentals facing the UK hotel sector as a whole. Indeed, we …
27th March 2012
Official data show that institutions made net purchases of property in Q4. This contrasts starkly with the net sales recorded by Property Archive. But we suspect that this may just reflect timing issues. More generally, the data seem to suggest that …
23rd March 2012
A small increase in IPD all-property initial yields in February, coupled with the modest decline in rental values, pushed down capital values by 0.3%m/m. That was the third fall in a row and the largest decline since June 2009. Over the coming months, …
22nd March 2012
The number of workforce jobs in the financial and business services (FBS) sector rose strongly again in Q4 and, given the normal lags of six to nine months, this points to continued growth in Central London office rents this year. However, the new supply …
14th March 2012
Encouragingly, recent surveys suggest that there could be enough debt available this year to meet the UK commercial property market’s refinancing needs of perhaps £30bn to £35bn. But these estimates are not definitive. Lenders may well choose to hold back …
13th March 2012
Arguably, if the recent drop in commercial property investment market activity is primarily a function of a lack of stock for sale, it will have little bearing on the outlook for capital values. Yet to our minds, changes in investment flows broken down by …
8th March 2012
Merger and acquisition (M&A) activity in the UK strengthened a little in Q4, but remains subdued by past standards. At the margin, this will dampen Central London office occupier demand, adding to our concerns that a rental downturn will be seen in these …
6th March 2012
Unlike yesterday’s manufacturing sector survey, today’s PMI data reported that activity levels in the construction sector strengthened in February. Activity in the commercial property sector continues to lead the way, but there was also a rise in housing …
2nd March 2012
Although they will come as little surprise to market participants, the latest data from the Bank of England confirm that the availability of credit for commercial property transactions continued to deteriorate in the early weeks of 2012. It is hard to see …
29th February 2012
The recent improvement in both the timeliest economic news and sentiment towards the euro-zone has led investors to question whether the exceptionally low levels of gilt yields that were reached at the end of 2011 are now justified. We still see four …
27th February 2012
The brighter tone of some of the economic surveys of late has not been reflected in Consensus forecasts for commercial property. Respondents to the latest IPF survey have cut their forecasts for rental value growth, capital values and total returns both …
24th February 2012
Much of the economic data has had a slightly healthier tone this month, but it is too soon to know how durable the apparent improvement might be. Meanwhile, although rental values were flat again in January, capital values edged lower for the second …
22nd February 2012
The fact that employment began to rise again in the final stages of 2011 may be less positive for the occupier demand outlook than it appears at first sight. Driven entirely by part-time jobs, the rise in employment is almost certainly further evidence of …
16th February 2012
Capital values edged down in the final stages of 2011 and the weak macroeconomic outlook means that this will not be a blip. The economy will drop back into recession this year. And that will push IPD all-property rental values down by about 2% in 2012. A …
13th February 2012
Given that official data have already shown that construction output fell in Q4, the negative headline balance from today’s RICS construction survey was no surprise. More interestingly, the sector data suggested that commercial property developers are …
8th February 2012
Viewed over a 30-year horizon, there may be a case for thinking that IPD industrial rental values have become largely immune to overhangs of vacant space. However, over the past decade, the relationship between availability and rents has changed, not …
The fact that the retail warehouse secondary to prime yield spread is now not too far away from its 2006-07 lows may not necessarily make this sub-sector vulnerable to underperformance in the near term. But it does suggest that when the economy and risk …
7th February 2012
The CIPS/Markit PMI showed that commercial property construction activity expanded for the 23 rd consecutive month in January. But with the economy likely to remain very weak, we think that the risks to occupier demand for property, development activity …
2nd February 2012
The UK appears to have fallen down the rankings as a target market for global property investors. In absolute terms, there is plenty of cause for caution about the outlook for UK capital values and total returns. But the prospects for the euro-zone …
1st February 2012
The latest data from the Bank of England confirm that the commercial property lending environment deteriorated markedly in the final stages of last year. Unfortunately, all the signs are that lending conditions are likely to get tougher in the coming …
31st January 2012
All-property initial yields rose from 6.19% in November to 6.22% in December. Aside from a temporary blip in October 2010, that was the first rise in yields since June 2009. In turn, capital values fell by 0.1%m/m, the first decline since mid-2009. These …
26th January 2012
A few local hot-spots aside, 2011 was not a great year for UK property markets. But the signs are that 2012 will be worse. Activity will remain weak and both commercial and residential property prices are likely to fall by at least 5%. If events in the …
25th January 2012
The falls in industrial rental values over the past few years have been much smaller than those seen in the early 1990s and also modest in relation to the depth of the 2008-09 recession. We suspect that this drop in the sensitivity of industrial rents to …
20th January 2012
Tesco’s plan to scale back its new-store expansion won’t have any direct impact on existing occupier demand for retail property. But the decision is symptomatic of wider weakness in consumer spending and only supports our view that retail rental values …
16th January 2012
The tone of the latest RICS commercial property survey was very downbeat and supports our view that rental values will decline this year. For now, the consensus forecast is that rents will increase slightly in 2012, but it may only be a matter of time …
12th January 2012
The results of the latest CBI/PwC Financial Services Survey suggest that, over the next six to nine months, Central London office rental value growth will slow pretty sharply from its current rate of around 7%y/y to zero. Given the weak economy, this …
9th January 2012
Today’s Credit Conditions Survey showed that the supply of residential mortgage finance continues to improve slowly. But with lenders now tightening credit scoring criteria again, this is less positive than it initially seems. In the commercial property …
5th January 2012
Net lending flows to commercial property rebounded in November but, given the sluggish economy and rising tensions in financial markets, a sustained improvement in the lending environment seems unlikely. Meanwhile, the commercial construction PMI dropped …
4th January 2012
Official statistics suggest that sentiment towards commercial property among institutional investors held up fairly well in the third quarter. But more timely monthly figures suggest that net investment flows have moved sharply into reverse in the closing …
21st December 2011
Property Archive reported that, thanks to the office sector, investment market activity rose for the seventh month in a row in November. But there are now signs of a nascent sell-off by investing institutions. While this may simply reflect normal seasonal …
19th December 2011
Given the sharp growth in trading activity in the property futures market, conceptually its pricing data perhaps give a better guide than swaps to the near-term prospects for physical property capital values. In reality, however, futures and swaps pricing …
15th December 2011
Financial and business services (FBS) sector employment rose strongly in Q3, which will have supported Central London office rental values. But a raft of banking job cuts have been announced since Q3 and the risks around the City and West End office …
14th December 2011
Even if we are right and non-bank financial institutions, e.g. insurance companies and pension funds, start to lend more meaningfully to commercial property this can only ever be a partial and/or temporary fix. For example, non-bank lenders may just …
12th December 2011
At face value, net disposals of property by investing institutions in each of the past three months could be a sign that capital values will start to fall again very soon. Equally, however, it could simply reflect the normal late-year rise in …
7th December 2011
By volume, merger and acquisition (M&A) activity involving UK firms in Q3 dropped to levels last seen at the time of the credit crunch and deep recession in late 2008 and early 2009. These data, therefore, tend to add to our concerns about the health of …
6th December 2011
The CIPS/Markit PMI for November showed a slight slowdown in the pace of growth in commercial property construction. Looking ahead, given very weak economic prospects, the risks to occupier demand, development activity and rental values would all seem to …
2nd December 2011
The recent underperformance by shopping centre rental values is unlikely to persist throughout 2012. But this does not mean that we envisage a recovery. Instead, we think that where shopping centres lead, standard shop and retail warehouse rental values …
Despite further large falls in gilt yields and little overall change in equity prices over the last quarter, we doubt that markets have fully appreciated the likely impact of the euro-zone debt crisis on the UK economy. Indeed, if the recession that we …
30th November 2011
Net lending flows to commercial property in October, of minus £1.3bn, were the worst since September last year. Given lenders’ focus on reducing property exposure, net lending flows are set to remain very weak for some time to come. … Lending to …
29th November 2011
Respondents to the IPF Consensus Forecasts no longer expect all-property capital values to hold up next year and have pencilled in renewed falls of about 2%, driven solely by higher yields. Reflecting our strong concerns about the real economy, however, …
25th November 2011
Property Archive figures showed that, driven by a rise in the office sector, investment market activity improved again in October, increasing from £2.5bn in September to £2.8bn. Even so, anecdotal evidence suggests that transactions activity has fallen …
24th November 2011
Today’s RICS construction survey again showed divergent trends, with declines in public sector activity in Q3 broadly offset by growth in the private sector. But in turn, the latter depended solely on continued – but slower – growth in commercial property …
23rd November 2011
Respondents to the Colliers/Real Estate Capital survey now expect commercial property prices to fall in 2012. The anticipated decline is roughly 2%, driven by adverse yield impact. However, we suspect that respondents to this survey are still too sanguine …
21st November 2011
The order books of UK manufacturing firms have taken a knock over the past few months and the steadily weakening prospects for the euro-zone suggest that there is worse to come. All else equal, this will undermine industrial rental values. But there are …
17th November 2011
We think that UK GDP will be flat in 2012 as a whole, with a technical recession likely in H1. Accordingly, commercial property rental values are likely to fall next year and income security fears will push up required yields. Our forecast is that …
14th November 2011
To us, it seems likely that the worst of the effects of fiscal tightening on public sector demand for Central London offices has not yet passed. To be fair, the public sector probably accounts for less than 10% of occupied London office space. Even so, …
11th November 2011
We do not think that the increase in average property yields of around 80bps that has been recorded on the transactions-based Property Archive data over the past nine months will be mirrored fully by the IPD figures. Even so, the rise itself cannot be …
7th November 2011
Today’s PMI showed that commercial property construction continued to expand at a steady pace in October. But with development finance remaining restricted and the economic and, hence, occupier market outlook having deteriorated sharply, we suspect that …
2nd November 2011
