Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
New more granular MSCI data shows that the outperformance of residential property over the past decade was primarily down to student housing. Indeed, only in the past couple of years have multifamily returns exceeded that of all property. But with overall …
22nd April 2024
After a positive end to 2023 commercial property investment has since lost momentum, not helped by a rebound in interest rates. But we still think interest rates will fall back this year and, while commercial capital values may see a further decline, …
12th April 2024
The drivers of industrial rental growth were turned on their head during the pandemic, but we expect the pre-COVID-19 relationships will soon be reestablished. That points to consumer spending as an important factor, reflecting the growing importance of …
26th March 2024
The online share of retail sales is still above its pre-pandemic trend, but a closer look suggests that is perhaps not as bad for the retail sector as it looks. For example, the share of online clothing sales has declined over the past year, which implies …
13th March 2024
The latest IPF Consensus Survey shows that forecasters have upwardly revised their 2024 expectations, which are now more in line with our view. Stronger rental growth help drive that improvement and that has also pushed up returns across the forecast …
8th March 2024
The latest crane survey reported the highest volume of London office starts on record. In part that reflects a refurbishment boom as developers retrofit their buildings to meet MEES standards and benefit from the green premium. New development is also …
28th February 2024
A version of this report was originally published as an opinion piece in The Times on 28th February 2024. The government will reportedly unveil an initiative to encourage lenders to offer 99 per cent mortgages in the spring budget. If implemented, it …
This week we held a Drop-In on commercial property distress across the US, UK and Europe. Clients can access a recording here and find related analysis on our dedicated landing page . This Update provides answers to several questions on the UK and …
16th February 2024
Distress in the US commercial property market is once again in the news, but the risk of that spreading to the UK is low. The rise in aggregate loan-to-value ratios to date looks manageable and with interest rates also trending down we doubt there will be …
6th February 2024
Minor improvements in all sectors, but very gradual recovery ahead Having deteriorated for the best part of 2023, sentiment over all-property occupier demand and rents improved in Q4. However, the balances remain negative, pointing to subdued demand and …
25th January 2024
The long boom in residential investment has been severely dented by soaring interest rates. Solid fundamentals mean investor interest will remain strong, but it is unlikely residential yields have peaked, or that relative performance will be as stellar as …
24th January 2024
Prices of commercial real estate equities suggest capital values will see a strong recovery in the first few months of 2024. But with no prospect of yield compression and rental growth set to slow, we think that is overly optimistic. That said, a decline …
19th January 2024
Lenders ready to meet increasing mortgage demand The latest Credit Conditions Survey showed a rise in the availability of mortgage credit in Q4 as financial market interest rates fell, but demand for mortgages slipped as mortgage rates took time to catch …
18th January 2024
In contrast to most of the past 20 years, RoUK industrial rental growth has almost matched the South East over the past couple of quarters. But that is unlikely to last. The boost to demand for big sheds in the Golden Triangle thanks to the surge in …
11th January 2024
Stubbornly high inflation pushed risk-free rates, and yields, somewhat higher than we had anticipated by the end of 2023. By contrast, rental growth proved surprisingly resilient even as the economy slowed to a crawl. But with economic growth set to be …
5th January 2024
High interest rates have taken longer to percolate through the economy than we expected, but we now think consumer spending will contract over the next six months. That poses a risk to our retail rent forecasts. However, the sector will still benefit from …
20th December 2023
This week, we held a series of property roundtable discussions with clients in our London office as part of our World in 2024 series. In this Update, we outline our thoughts on the most interesting questions raised, covering electoral uncertainty and …
14th December 2023
Hybrid working is gradually allowing firms to cut back on the amount of office space they require, but it also means they need to think more about the attractiveness of their offices to support attendance levels across the week. Moving to a smaller, prime …
11th December 2023
Hotel demand has suffered recently from the impact of high inflation and interest rates weighing on discretionary spending. But thanks to the soaring cost of foreign holidays and a revival in international tourism, we think that hotel rental growth will …
5th December 2023
With hindsight, part of the boom in the industrial sector seen during and after the pandemic now looks like a bubble. That raises the risk that the overhang of assets started during that period of irrational exuberance will now weigh on rents. However, …
1st December 2023
In this Global Economics Update , we describe eight of the biggest risks to our economic forecasts for 2024. The unusual nature of this cycle and uncertainties surrounding the transmission of monetary policy mean that the biggest risks relate to central …
30th November 2023
Consensus more pessimistic in 2024, but view further out improves The latest IPF Consensus Survey shows that forecasters have downwardly revised their expectations for 2024, as a downgrade in capital value growth outweighed some improvement in rents. That …
29th November 2023
Our recent r* work reinforces the view that property yields will stay relatively high longer term. That implies global returns in low single digits over the next decade or so, well below pre-pandemic averages. Our recent Global Economics Focus summarises …
27th November 2023
The bankruptcy of WeWork in the US was a predictable end to a long-running saga. Its effects on office markets will not be systemic, but they will reinforce existing weaknesses and pile more bad news on the sector just at the wrong time. The announcement …
9th November 2023
This week we held a drop-in on the prospects for commercial property investment in the UK and Europe, which can be found here . This Update provides answers to the most interesting questions that emerged from the discussion. Will prime offices outperform? …
3rd November 2023
Weak demand and investment, but capital values nearing the trough Having started the year on a somewhat promising footing, all-property occupier demand has weakened since and fell further in Q3. The demand balances for offices and retail remained …
26th October 2023
Active demand for London office space hit a four year high in Q3, but we doubt that will drive a decline in vacancy rates. Most of the rise will reflect churn as firms make moves that had been delayed by the pandemic, including those looking to reduce …
24th October 2023
The diffusion of AI technologies should be a fillip for the global economy over the coming years. That will bring benefits for real estate performance in developed economies, particularly in those office markets with concentrations of knowledge …
20th October 2023
Surging interest rates caused mortgage demand to slump in Q3 at the same time as rising defaults led lenders to tighten mortgage credit conditions. Similarly, it became more difficult to secure commercial real estate loans. We expect availability of …
12th October 2023
The UK manufacturing sector has faltered in recent months, as rising interest rates and slowing economies in many parts of the world have cut global demand. That spells trouble for manufacturing demand and suggests yields in that subsector will see a …
10th October 2023
The sell-off in bond markets has taken a breather today, helped in part by softer data on the US labour market. However, the scale of the moves over the past week has invoked comparisons to previous financial crises that have been caused by sharp moves in …
4th October 2023
Food price inflation is now falling back, which will help boost supermarket profits. That means the recent underperformance of the supermarket sector relative to all-retail will soon come to an end. Total returns are set to turn positive in 2023 and by …
The leisure sector is now feeling the impact of the cost-of-living crisis, with rising vacancy and declining rents. But we don’t think the retail sector will follow in its footsteps. Households are likely to continue to shift spending away from expensive …
26th September 2023
Commercial construction surveys have shown improving activity in recent months, despite high interest rates and a slowing economy. Our Financial Conditions Indices (FCIs) suggest that might be because market sentiment and credit conditions have, so far, …
21st September 2023
The news that UK Prime Minster Sunak is set to further dilute the government’s climate policies demonstrates that when the political going gets tough, climate policies are the first to fall by the wayside. From a macro perspective, the biggest risk is …
20th September 2023
The surprising strength of office market rents looks to reflect the increased use of incentives. Indeed, passing rents have seen a sharp decline, with all-office annual growth recently falling to a record low of minus 3.3%. Given an upcoming recession and …
15th September 2023
The UK government’s decision to block Marks and Spencer’s (M&S’) re-development of its flagship store highlights the challenges in the transition to net zero. In particular, while authorities are using regulation to force owners into greener choices, if …
7th September 2023
Higher interest rates lead to forecast downgrades The latest IPF Consensus Survey showed a reversal of last quarter’s forecast upgrades, bringing the consensus view more in line with our own. The surge in interest rates thanks to high inflation is behind …
6th September 2023
Rising interest rates have pushed down commercial property equities, which implies capital values will come under further downward pressure. That said, the large correction in equities seen in 2022 meant annual growth has now levelled out. That suggests …
5th September 2023
The sharp drop in industrial take-up in recent quarters may be a sign that the sector is becoming more vulnerable to changes in economic conditions. Indeed, the decline has coincided with a 25% drop in online retail volumes since the end of 2020. However, …
24th August 2023
In contrast to shops and retail warehouses, the nascent recovery in shopping centre rents has already faded. The shift to remote work and greater exposure to online competition has led to relatively weak sales of the type of goods shopping centres offer, …
14th August 2023
Last week, we held a Drop-In on the future of office property, which you can view here . This Update provides answers for a variety of questions from a UK perspective that emerged from the discussion. How does the office outlook compare across regions in …
2nd August 2023
We have made only minor changes to our latest global forecasts which still imply that property will underperform other assets in the short to medium term. Further out real estate returns are set to recover, but, with yield spreads more compressed than in …
19th July 2023
The recent rise in gilt yields to levels above those seen in the aftermath of the mini-Budget has not triggered a similar rush to sell property assets. In part because past falls in capital values mean multi-asset funds are unlikely to become overexposed …
14th July 2023
Lenders expect narrow spreads to keep upward pressure on mortgage rates The narrowing in interest margins reported by mortgage lenders in the Credit Conditions Survey suggests that mortgage rates won’t fall significantly anytime soon. Meanwhile, it became …
13th July 2023
The recent strength of net lending to commercial property can’t be explained by a rise in investment. Instead, we suspect some investors are borrowing against older assets to provide additional equity when refinancing newer acquisitions whose loans are …
5th July 2023
We recently held a Drop-in titled “Industry’s decarbonisation challenge – From aviation to property”, which you can view on-demand here . This Update addresses some of the questions we received during the event, including those that we did not have time …
3rd July 2023
The recent fall in commercial property values has not driven a flight to quality in either the retail or industrial sectors. But there has been a sharp rise in the office non-prime/prime spread, as occupiers and investors seek best-in-class assets to …
30th June 2023
With interest rates now set to be higher for longer, we are sticking with our view the UK will enter a recession later this year. That will hit occupier demand across all property sectors, but industrial should weather the downturn relatively well. After …
23rd June 2023
The latest MSCI data indicate that values in western European office markets have held up better since the start of the pandemic when compared with the US and UK. But given these cities face similar long-term problems, we remain downbeat about the …
16th June 2023