Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
Commercial property’s recent good run continued in October. The annual rate of rental growth surged ahead after only breaching positive territory for the first time in almost two years during August. However, given the economy’s headwinds over the near …
3rd December 2021
Development activity rises sharply in October A drop in repayments and rise in development activity resulted in positive net lending in October for the first time since March. Despite this turnaround, credit conditions will remain tight and uncertainty …
29th November 2021
More upgrades to the consensus view, but heavily driven by 2021 The resilience of the commercial property market has led to further upgrades to the IPF Consensus view for this year, albeit still below our forecast. Beyond this year, we are more downbeat …
26th November 2021
Over the last two years, serviced offices have seen more upheaval than most other real estate sectors. But there have been some encouraging signs over recent quarters and long-term trends may have moved in their favour, though we don’t expect improved …
25th November 2021
Although the economic backdrop has recently become less favourable for UK asset prices, we expect that the economic recovery will regain some vigour in the second half of next year, that CPI inflation will fall close to the 2.0% target in late 2022 and …
22nd November 2021
Overview – The economic recovery has stalled and the near-term outlook is softer. Meanwhile, higher inflation is expected to bring interest rate hikes as early as December 2021, though we think that the pace of tightening will be fairly gradual. The …
19th November 2021
Compared to bonds and equities, property valuations deteriorated further in Q3. This was due to a combination of a fall in property yields on the one side and a rise in both bond and equity yields on the other. Although we expect a less dramatic fall in …
12th November 2021
The latest real estate data came in stronger than expected. But while there have been encouraging developments, particularly in the retail sector, we think this signals a short-term boost to prospects rather than a permanent improvement. The further …
11th November 2021
Shortages continue to threaten recovery The latest RICS survey indicated that construction activity remained robust in Q3, while the outlook for the near term is favourable. Although we agree, we expect that building material and labour shortages, along …
4th November 2021
A modest improvement, but supply issues continue to bite Construction firms reported that activity strengthened in October despite higher costs and continued difficulty sourcing materials. The big picture is that until those constraints ease construction …
Europeans are returning to cities, though the return to offices has been much slower and this has had negative effects on city retail. Looking ahead, weaker demand for office and retail will weigh on performance in cities with large concentrations of …
2nd November 2021
Rising repayments weigh on net lending Net lending to UK commercial property was negative for the fourth month in a row in September, probably due to a rise in repayments. We expect further repayments, caution when seeking development opportunities and …
29th October 2021
Office demand improves for first time since onset of pandemic Surveyors reported a continued improvement in occupier demand and investment enquiries in Q3, and notably the net balance for offices turned positive on both measures. That said, surveyors …
28th October 2021
This Budget was perhaps more notable for what the Chancellor didn’t do rather than what he did. The OBR handed Rishi Sunak a significant upgrade to its forecasts for the public finances but, while the Chancellor spent some of the windfall a substantial …
27th October 2021
September was another good month for commercial property, with the first year-on-year rental growth recorded since the onset of COVID-19. But as clouds gather over the economic upturn, we suspect that the real estate recovery will also struggle to …
22nd October 2021
By any standard, retail property has had a torrid time during the pandemic. The latest data on online sales look like further bad news, with the share of spending much higher than expected after lockdowns. But the recovery in consumer demand has also been …
21st October 2021
With workers spending more time away from city centres, some expected that out-of-town offices could swing back into fashion. It is still early, but from the UK data, the evidence suggests that it is suburban retail, not offices, that is benefiting most …
15th October 2021
Improving credit conditions may protect housing market from higher rates An ongoing improvement in credit availability may offset the increase in Bank Rate we expect in 2022. That offers support to our forecast that mortgage rates will remain low. A …
14th October 2021
UK employment has recovered strongly in recent quarters and is set to see further growth into 2022. This will be good news for UK offices, especially in regional cities. But with occupiers set to look beyond headcount when making their space decisions, we …
7th October 2021
Recovery in construction falters due to shortages The further drop in the construction PMI in September suggested that the recovery in construction has faltered amid a severe lack of materials and staff, spiralling costs, and softening demand. The drop in …
6th October 2021
With UK policy rates now set to rise as early as next spring, this has tipped the risks to our commercial property outlook to the downside. But we don’t think the change is significant enough to make a wholesale downgrade to our view. Recent developments …
30th September 2021
Broad based decrease in net lending Net lending to property decreased for the third consecutive month in August, driven by falls in both lending for standing investment and development. Looking ahead, we think that tight credit conditions and the slow …
29th September 2021
The recovery in UK commercial property continued into August, despite a backdrop of more equivocal economic data. But, while the economic softness should be short-lived and returns for 2021 are likely to remain healthy, we suspect that the real estate …
24th September 2021
The Evergrande crisis has made waves in financial markets this week. But, while the developed property markets we cover may see some short-term upheaval, we think the impacts outside of China are unlikely to be severe or lasting. For property investors, …
23rd September 2021
One feature of the COVID-19 era has been persistent non-payment of rents, particularly in the retail and leisure sectors. But we don’t think this will come to a head next year once the eviction ban lifts, as by then the economy should be in better shape …
17th September 2021
The most recent commercial property data have been surprisingly upbeat and have raised the possibility that the recovery could be stronger than expected. But we think investors may have run ahead of themselves and this trend is unlikely to be sustained …
16th September 2021
With more hybrid working post-pandemic, the view is that office rents will be under pressure for many years. This raises questions about which locations could be more resilient and if rents in central business districts (CBDs) will perform better than …
8th September 2021
Materials shortages restrain activity The further easing in the construction PMI in August was due to materials shortages rather than any softening in demand. The drop in the headline construction PMI from 58.7 in July to 55.2 in August suggested that, …
6th September 2021
Consensus could be surprised on the downside beyond 2022 The upgrades to the IPF Consensus views for this year still leaves them below our forecast. However, our more downbeat view on the outlook for offices because of the shift to more remote working …
3rd September 2021
Second consecutive fall in net lending as banks tighten on repayments The fall in July’s net lending total was the fastest drop since last July. As investment activity remained healthy and the economic recovery remains solid, it is likely that lenders …
31st August 2021
Overview – The economic recovery has lost some momentum over the summer, but we expect that this will be a temporary setback and the backdrop will be strong into the medium term. There is growing evidence of a sustained commercial property upturn, albeit …
25th August 2021
New plans have extended Permitted Development Rights (PDRs) on commercial property, allowing swifter conversion to residential use. These have been cautiously welcomed, but, in our view, they do not radically shift the outlook for either residential or …
18th August 2021
On our measure, property looked slightly worse value relative to bond and equities in Q2. The worsening was due to a marked fall in property yields, driven by the industrial sector. Outside of over-valued industrial, all other property sectors remained …
16th August 2021
Cities are central to property performance. And the largest are seen as hugely important by investors. But the pandemic has turned many received ideas about real estate on their head and we think that performance in gateway markets will remain relatively …
10th August 2021
The recent downward revision to our GDP growth forecasts and the recent hawkish signs from the Bank of England which prompted us to bring forward our forecast of when monetary policy will be tightened means the economic backdrop is a bit less conducive …
9th August 2021
Recovery gathers pace, but may prove short-lived The latest RICS survey confirmed that construction activity rose strongly in Q2 and suggests expectations are upbeat about the outlook. But while we think output is likely to remain strong in the coming …
5th August 2021
Construction PMI dips, but underlying demand strong July’s construction PMI figure was slightly disappointing compared with the previous month’s highs. But it continued to point to robust activity and we think any dip is most likely a reflection of …
Office and retail pessimism eases, while industrial sentiment still buoyant Surveyors indicated that both occupier demand and investment enquiries improved in Q2 on the back of stronger industrial activity. Looking ahead, expectations for office and …
29th July 2021
Net lending falls sharply as repayments rise As the economic recovery gathers pace, lenders have been less willing to grant further payment holidays to landlords and a rise in repayments probably explains the sharp decline in net lending in June. Looking …
Less favourable demand fundamentals and less scope for yield compression mean that European residential returns are likely to be lower in the coming years than over the previous decade. An analysis of the relative outlook across selected western European …
27th July 2021
The acceleration in all-property capital growth in June reflected a sharp fall in yields and strong rental growth. But, even as a fast economic rebound boosts occupier demand in the coming months, we think this rate of growth in values will not be …
23rd July 2021
The supermarket yield spread to “all-retail” has grown to almost the level it reached in 2009. However, we think there are good reasons for this. Admittedly there are risks ahead for the sector that could dent future prospects, but for now, supermarkets …
22nd July 2021
While longer-term drivers are supportive of flexible offices, we think demand for space will be held back by the slow return of workers to the office, by more competition from home offices and by high levels of cheap, vacant traditional space. A year ago, …
20th July 2021
Easing lending conditions to support house prices A further easing of concerns about the outlook for property prices and the economy suggests that mortgage lending conditions will continue to improve. That will help ensure that house prices are resilient …
15th July 2021
While London rents are set to reverse some of the fall of the past year, we doubt the premium of rents in the capital over the national average will return to its pre-virus level. But outside London rental growth is set to accelerate sharply. London …
13th July 2021
Although we expect the economic outlook will continue to improve, we think that South East office rents will still edge lower this year. What’s more, we don’t expect much of a rebound in 2022, as a shift to remote working will continue to weigh on demand. …
7th July 2021
Construction booming despite difficulty sourcing materials Despite a further deterioration in the availability of building materials, construction output rose at the fastest pace since 1997 in June. That suggests output in the sector is now well above …
6th July 2021
The government’s furlough scheme is regarded as one of the successes of the UK’s coronavirus policy response, but all good things must come to an end. Over the next few months, its unwinding will bring some risks, though we do not expect these to have a …
2nd July 2021
A surprise rise, but net lending is likely to fall again soon After falling sharply in April, net lending rose in May. We think this can be explained by the extension of payment holidays rather than an increase in new loans. Further ahead, we expect a …
29th June 2021
We think that delayed Central London office projects and new industrial starts will drive commercial construction output this year. But once the backlog of delayed projects has been exhausted, we think structural factors and high costs will deter …
24th June 2021
