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IS
SUMMER REALLY ON THE WAY?
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With the election now over we need some certainty in
the political situation translating to continued
improved activity in the commercial property market.
This is starting to happen! More property is now
coming to the market with companies considering their
property situation – either for relocation or even
expansion. The offices market is subdued although
signs of renewed activity and some local hot spots
like Hagley Hall Mews where a number of new tenants
have recently signed up.
Commercial property lettings activity continued to
pick up across office and retail property within the
West Midlands for the second consecutive quarter,
although investment demand has slowed somewhat outside
the London metropolitan area.
Confidence in the outlook for lettings
increased, but sentiment was slightly less buoyant
than at the end of the fourth quarter of 2009 across
the UK. Regionally the office market saw the biggest
increase in confidence with 18 percent of surveyors
reporting a rise rather than a fall, up from a
negative four percent the previous quarter. Some
surveyors voiced concerns over the potential impact on
regional lettings activity of the anticipated public
sector employment cuts following the election.
Over
April, the twin drivers of capital growth – yield
compression and rental growth – were mixed: while
initial yields have compressed by a modest 10 basis
points for the fourth-consecutive month, negative
rental growth has marginally worsened – from -0.1% in
March to -0.2% last month.
The positive influence of yield compression and the
negative influence of weakening rental levels are
consistently reflected across the sectors. Over a
12-month horizon, capital growth has appreciated at
its fastest rate in more than three years, at 11.1%.
IPD UK
report in Q1 “The rapid bounce back in commercial
property pricing at the end of last year has run its
course, giving way to more sedate growth in recent
months – indeed, the 80 basis points capital growth
recorded for April was half that achieved in March.
“The UK market has delivered 14.0% positive capital
growth over the last 10 months; the retail sector has
rebounded most strongly, with 17.2%, followed by
offices, at 12.0%, while industrials have gained
10.1%.”
According to the Royal Institution of Chartered
Surveyors Property Survey “There are
some signs that a lower pound and a gradual
rebalancing of the UK economy towards greater export
activity is starting to feed through into industrial
lettings activity with a continuing positive take up
trend across West Midlands.
“Growth in investment transaction
activity continued in Q1 albeit at a slower pace
outside of London. The investment recovery would be
reined in by rising borrowing costs.”
The more active area is the residential market where
sales are up year on year and the level of valuations
and new property on the market continues to rise. The
perception that we have left the bottom of the market
now seems a firm reality. Prices are firming and in
certain locations showing some growth. The result from
this is the market for land is improving with demand
and the shortage of new and existing product
available. Again time to consider your existing
property holdings is conversion to a residential use a
possibility ? can planning consent be achieved ? and
what is the value if successful ? – take advice from
your property advisor.
Demand for commercial property is still subdued with
some noticeable activity for both food and non food
retail, positive news from Tesco who have agreed in
principle to proceed with the redevelopment of the
Crown Centre in Stourbridge Town Centre and will be
sharing there vision in public consultation in the
Crown Centre later this month, with a full planning
application hopefully to be submitted later in the
Summer. The retail property market is still quiet but
we will see some much needed activity once Tesco get
underway.
So summer perhaps is here - a few signs of sunshine
prepares us for an improved 2nd half of the
year – let us hope it continues.
Alan K Knight FRICS
Head Of Commercial
Walton and Hipkiss – Stourbridge
01384 397 797 |
