PROPERTY MARKET REVIEW OCTOBER 2016
Our monthly property market review is intended to provide background to recent developments in property markets as well as to give an indication of how some key issues could impact in the future.
We are not responsible or authorised to provide advice on investment decisions concerning property, only for the provision of mortgage advice. We hope you will find this review to be of interest
Commercial development activity positive
The commercial property development sector has experienced the strongest rise in activity in nearly a year, according to research conducted by Savills. The Total Commercial Development Activity Index, a net balance which monitors the overall performance of the UK commercial property sector, increased from -3.5% in August to 12.1% in September, signalling growth for the first time in four months.
Commercial developers across the UK were positive when asked about the three month outlook for activity. As market confidence improves, panellists specifically expect to see increases in retail and leisure work, office projects and industrial / warehouse activity.
From a regional perspective, all three monitored regions (London, South East, rest of the UK) recorded higher levels of commercial activity in September. The ‘rest of the UK’ recorded the strongest rate of growth, the net balance rising from +3.4% in August to +21.1% in September.
Commercial property in Scotland looks attractive
After an initial pricing adjustment following 23 June, activity levels in Scotland’s commercial property market have picked up. Although values have taken a slight hit, demand for commercial property has remained robust and deals are concluding. Solid fundamentals including strong rental growth make Scottish cities such as Edinburgh and Glasgow attractive propositions for commercial property investors.
The fundamentals reflect the fact that the capital saw the highest ever take-up of commercial space, exceeding one million square feet in 2015, and in 2016 office lettings activity remains bullish, as exampled by the Atria office development in Edinburgh achieving a ‘super prime’ rate of £33 per square foot.
Lending to the sector still on course
The latest European Lending Trends report from global real estate services firm Cushman & Wakefield, which surveys 50 major lenders across Europe, has shown that 95% of respondents believe the repercussions of the UK’s decision to leave the EU will not impact their lending exposure to the UK.
Although the report did state that whilst new loan originality across the whole of the European region was down over the last six months, this was mainly as a result of their caution ahead of the referendum.
Edward Daubeney at Cushman & Wakefield commented: “Our survey shows that Brexit is having little impact on market sentiment from a lending perspective and the fundamentals remain encouraging. The trend towards lending by geography has also not changed significantly over the past six months, albeit the UK’s share has softened marginally in the wake of the vote result.”
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.