Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
In Q3, net commercial property lending flows dipped back into negative territory. Given lenders’ high exposure to the sector, along with the rapidly weakening economic backdrop, there seems little prospect of increased lending any time soon. … Lending …
31st October 2011
All-property rental values again held broadly steady in September, which has now been the case for 21 months. But this continues to be largely due to Central London office markets. Looking ahead, however, we now think that the economic prospects are weak …
27th October 2011
Despite the fragile economic backdrop and in contrast to the office and industrial sectors, retail property landlords have recently enjoyed positive income growth. In our view, however, with consumer spending set to fall further, this outperformance will …
25th October 2011
Over the next 12 to 18 months, we now expect IPD all-property rental values to decline. And there was little in the latest Lease Events Review from Strutt & Parker (S&P) and IPD to suggest that the majority of landlords will be able to insulate fully …
21st October 2011
The economic outlook continues to deteriorate pretty rapidly and, reflecting downgrades to our macro forecasts, we have now cut our expectations for UK commercial property returns. Rather than remaining broadly flat next year, we now think that …
20th October 2011
The euro-zone debt crisis is likely to have severe adverse effects on the UK economy at a time when domestic contractionary forces are building. We now expect UK GDP growth to slow from about 0.8% this year to around zero in 2012, with a high chance of a …
18th October 2011
The overall tone of the latest RICS commercial property survey took a marked turn for the worse. Indeed, the survey did nothing to ease concerns that, over the past three months, the risks of a renewed economic recession and thus a second downward leg for …
15th October 2011
Commercial property is no longer obviously undervalued and, rather than a shortage of cash, it is a lack of suitable buildings available to buy that is currently the biggest problem for many investors. Given this, we suspect that any direct or indirect …
11th October 2011
Despite recent financial markets turmoil and the knock-on effects for the real economy, we do not think that the outlook for growth and employment has yet deteriorated to a level that merits a downgrade to our UK commercial property forecasts. Rather, we …
6th October 2011
Today’s CIPS/Markit PMI showed that commercial property construction continues to grow steadily. However, the weak economic outlook suggests that it is more likely to slow sharply over the medium term than to continue to expand. Elsewhere, ONS figures …
5th October 2011
Compared with recent quarters, the tone of the latest CBI/PwC Financial Services Survey was pretty weak. Of course, given the turmoil of the past few months, that is no major surprise. Even so, today’s survey data nevertheless tend to support anecdotal …
4th October 2011
In August, net lending to the economy as a whole rebounded strongly from July’s weak result. But lending to commercial property was an exception. There seems little prospect that new credit for commercial property will become any easier to get for some …
30th September 2011
Today’s Bank of England Credit Conditions Survey suggested that the near-term outlook for residential property lending, if anything, may be slightly more positive than in the commercial property sector. But with the economic recovery now faltering, we …
29th September 2011
By contrast with the track record of outperformance, we expect hotel property total returns to average about 7% p.a. over 2011-13, below the all-property figure of about 8%. … Can hotels weather the consumer spending …
28th September 2011
Apart from Central London, where shop vacancy is now almost nonexistent, there remains little cause for optimism about retail occupier markets. Admittedly, there will be very few new shopping centre completions over the next 12 to 18 months. But given the …
23rd September 2011
Last week, we revised down our forecasts for 10-year government bond yields, the benchmark riskfree rate for commercial property, from 2.5% at end-2011 – and right through to end-2013 – to just 2%. All else equal, this revision would point to a near-term …
20th September 2011
In recent months, retail property rental value trends – which were already pretty weak – have taken a turn for the worse. What’s more, the recent data-flow, such as weak retail sales and problematic vacancy rates, does not bode well for the future. We …
17th September 2011
Financial and business services (FBS) sector employment edged lower in Q2, which reinforces the downside risks to Central London office rental values. For now, supply constraints should see further rental increases. But we remain comfortable with our …
15th September 2011
The recent outperformance by lower grade London offices is unlikely to be repeated in the near-term by secondary property in other sectors. Indeed, over the coming quarters, it is more likely that property investors shift back down the risk curve. For …
9th September 2011
By volume, merger and acquisition (M&A) activity involving UK firms was weak in Q2, while the recent turmoil in financial markets does not bode well for Q3. Given that M&A is an important revenue stream for many Central London office occupiers, especially …
7th September 2011
The message from the latest IPF Consensus forecasts is that the commercial property market as a whole remains set for a few slow but steady years. We broadly share that view, but are much more concerned than the Consensus about the medium-term outlook for …
3rd September 2011
The last quarter has seen UK markets respond to signs that the economic recovery is slowing as well as fears that policymakers are relatively powerless to provide additional monetary or fiscal stimulus to the economy. The turnaround in view has been …
1st September 2011
After some mildly encouraging figures over the first half of 2011, net new lending to commercial property fell back into negative territory in July. Against the backdrop of a sluggish economy and the still-high level of outstanding debt in the sector, new …
31st August 2011
In our view, there is little reason to think that over the coming quarters commercial property capital values will continue to see yield-driven increases. Indeed, one general theme running through the recent data-flow has been the sluggishness of the …
25th August 2011
All-property initial yields were unchanged in July, at 6.28%. All-property capital values have risen by 1% to 2% since the start of the year and, reflecting the near-term prospects of both flat rents and yields, we think that this will also be the gain …
24th August 2011
On IPD figures, there is only patchy evidence of a pick-up in refurbishment activity. Admittedly, by covering only institutional grade property, these data may understate the true extent to which purchasing and re-fitting of run-down stock has risen. That …
19th August 2011
Our forecast is that all-property total returns will decline from 15% in 2010 to around 8.5% this year, before easing down to between 6% and 7% in both 2012 and 2013. This subdued outlook reflects our view that, while the property market is not starting …
16th August 2011
Arguments that further “flight to quality” will insulate the landlords of prime retail property from the effects of a renewed drop in consumer spending have a strong intuitive appeal. But there must be a risk that if, as we expect, consumer drops below …
12th August 2011
The fact that vacancy rates are below average suggests that IPD City and West End office rental and capital values will continue to rise for another six to 12 months. But, given the subdued demand outlook and the resurgent development pipeline, there is a …
10th August 2011
Today’s RICS Construction survey suggested that private sector activity was strong enough in Q2 to balance a decline in public sector output. Looking ahead, a slowdown in construction activity would not be a surprise. After all, credit remains tight and …
5th August 2011
Today’s PMI showed that activity in the construction sector as a whole, as well as in the commercial property sub-sector, continued to grow solidly in July. However, the availability of property development finance remains tight and the economic outlook …
3rd August 2011
The results of the latest Colliers/Real Estate Capital survey were patchy, with expectations for some sectors being upgraded and some downgraded. On balance, we would view this as further confirmation that the commercial property market as a whole is …
2nd August 2011
Survey evidence pointing to a modest improvement in the property lending market received some support today. Bank of England data showed that net property lending in June reached a two-year high. But the huge overhang of debt to the sector means that new …
30th July 2011
The latest RICS survey suggests that, for now, occupier demand is proving resilient to the slowdown in the wider economy. That said, outside the Central London office market, there was little to suggest an imminent return to rental value growth. … RICS …
29th July 2011
Investment market activity remained pretty weak in June. Indeed, it was the third consecutive month in which the total value of transactions had been less than £2bn. That had not happened since November 2008, when the credit crunch was basically at its …
23rd July 2011
Trends in real estate equity prices point to gains in IPD all-property capital values for 2011 as a whole of about 10%. That is far too optimistic. But to the extent that real estate equities are being used as a substitute for direct property investment …
21st July 2011
To us, the prospects for consumer spending on leisure services remain pretty good and anecdotal evidence certainly suggests that institutional buyers are increasingly targeting leisure property. We expect leisure returns over 2013-15 to be comfortably …
16th July 2011
For now, leisure services operators are managing to combine positive sales volumes growth with price increases. That points to a positive near-term outlook for leisure property rental values. Nevertheless, given the very weak outlook for household …
14th July 2011
The latest CBI/PwC Financial Services Survey contained a positive message on job creation. But despite below-average vacancy rates and very limited new supply pipelines in both the City and West End office markets, a more detailed look at the survey …
6th July 2011
Today’s PMI showed that the pace of the recovery in construction activity moderated in June. In essence, resilience in the civil engineering and commercial property sectors was enough to offset a decline in house-building. However, we suspect that a …
5th July 2011
Today’s Credit Conditions Survey suggested that the near-term outlook for commercial property lending may be slightly more positive than in the residential sector. But lending prospects in both markets still look pretty subdued. … Bank of England Credit …
1st July 2011
All-property rental values were flat again in May. Rental values are currently around 11% below their 2008 peak. Further significant falls seem unlikely. Equally, however, we expect GDP growth to remain well below trend both this year and next, so it …
28th June 2011
Investing institutions remained net buyers of commercial property in Q1 and, over the coming quarters, we suspect that they will continue to increase their portfolios. Elsewhere, while we do not expect a surge of foreclosures and forced sales, today’s …
25th June 2011
Data on tenant failure probabilities from the Fidelity Income Risk Monitor (FIRM) may help to explain why distribution warehouse yields are currently lower than standard industrial property. However, the likely shape and drivers of economic growth over …
22nd June 2011
The government’s proposal for permission-free office/industrial to residential conversions is pretty radical and, relative to what might otherwise have occurred, we estimate that the proposals could potentially lead to an extra 1m dwellings. Even if that …
17th June 2011
Financial and business services (FBS) sector jobs rose in Q1, but the year-on-year growth rate slumped and is well below the level that, in the past, has been required to deliver a sustained rise in City office rental values. We remain comfortable with …
16th June 2011
The rise in the value of mergers and acquisitions (M&A) activity involving UK firms reported in Q1 flatters the underlying picture. The sharp decline in the number of deals concluded implies that a key source of revenues for the City’s core occupier base …
7th June 2011
The recent data-flow suggests that West End office rental value growth for 2011 as a whole could be considerably higher than the City. That would be in contrast with both our own and the consensus forecast. However, we think there are still good reasons …
2nd June 2011
In February, the CIPS/Markit construction PMI hit its highest level since last June, driven primarily by a surge in residential construction activity. However, activity in the commercial property sector slowed a little, consistent with the uncertain …
After a modest improvement in Q1 as a whole, net new lending to commercial property was negative again in April. There has been nothing in the anecdotal evidence or data-flow in recent months to alter our view that credit availability in the sector will …
1st June 2011
