Posts with tag: commercial property market

UK commercial property investment returns dip

Published On: August 14, 2015 at 3:06 pm

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Categories: Property News

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The latest CBRE Monthly Index shows that total return on investment in UK commercial property fell marginally in July.

A fall from 1.3% in June to 1.2% in July was partly put down due the result of weaker performance in Central London. Despite the monthly fall, the last year has seen rental value growth rise in the region, reaching a post-recession high of 9.65%.[1]

Values

Overall rental and capital values continued to rise during July, but at a slower rate. Rental values grew by 0.3%, slower than the 0.5% recorded in June. Capital rates were down to 0.7% from 0.9%.[1]

Data from the report shows that the office sector was one of the largest movers during July, however another good performance saw returns fall from 1.8% to 1.3%.[1]

Figures show that the central London office market is going from strength to strength. Yearly growth in the 12 months to July reached record rates, while offices in the area have the highest rental growth of all UK commercial property markets in the last year. This was driven by a 12.48% growth in the City and a 10.52% rise in Midtown.[1]

UK commercial property investment returns dip

UK commercial property investment returns dip

Strong growth

Michael Haddock, senior director at CBRE, commented. ‘despite the slight dip in July, office rents and capital values in the central London market have been growing strongly over the last year. As a result of this performance, investment into the market has grown from £2.4m in the first quarter of 2015 to £4m in the second quarter.’[1]

‘The high level of competition for central London assets means that investors, both local and foreign, are increasingly looking at opportunities in the rest of the UK and activity has been growing at an even faster rate outside London,’ he added.[1]

Additionally, high street shops and industrials recorded strong rental growth during July, albeit with regional differences. The South East outperformed the rest of the UK in both sectors.

Rental value growth for shops has grown from 0.2% to 0.5% in the South East, with the rest of the UK seeing values remaining fairly flat. [1]

[1] http://www.propertywire.com/news/europe/uk-commercial-property-investment-2015081410866.html

 

 

Will retail growth help commercial property market?

Published On: May 28, 2015 at 3:44 pm

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Categories: Landlord News

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Forecasts have suggested that retailers could well be in for their greatest performance in 27 years, which in turn could be good news for the commercial property industry.

A survey from the Confederation of British Industry (CBI) suggests that the mix of low inflation and a surging labour market has increased the average household’s spending power. In their survey of 63 retailers, the CBI found that this had increased growth in both retail and sales orders. According to the report, retail is experiencing its best performance since 2007.

Commercial gains?

Director of economics at the CBI, Rain Newton-Smith, said that this would be of benefit to national chains on the lookout to stable their financial ships following the recession. She said, ‘retailers will be encouraged to see growth in sales and orders on the high street bounding ahead.’[1]

‘Low inflation, which we expect to remain below 1% for the rest of the year, has given household incomes a much-needed boost and greater spending power.’[1]

‘Overall the outlook is bright for firms on the high street, but challenges still remain, especially for food retailers, who are still feeling the heat of stiff price competition from new entrants to the sector.’[1]

Will retail growth help commercial property market?

Will retail growth help commercial property market?

 

Investment

The last point made by Newton-Smith could be of particular interest to the commercial property market. Supermarkets for example have struggled with the new influx of discounted brands being imported from abroad, and some have been forced to abandon plans to open new stores.

Data from the CBI’s report shows that brands with intentions to invest in business growth within the retail sector are still in negative figures. Obviously, this could be taken as very bad news, but a lot depends on the plans of outside investors and developers. Land previously set aside for supermarkets will eventually find its way back on to the market, meaning that it could be used instead for leisure or retail purposes. If this proves to be the case, strong regional growth will be expected, with any surge in retail sales benefiting investors with similar property elsewhere.

As a result, demand for strong retail destinations from domestic and overseas investors alike could rise further. This is turn will lead to an increase in activity in the retail property sector, in addition to allowing established investment firms the change to make further gains on their existing assets.

[1] http://www.movehut.co.uk/news/strong-retail-performance-set-to-boost-market-activity-29984/