UK’s commercial property market continues to pick up in Q1 2017

The UK’s commercial property market continues to pick up, with industrial space outperforming office and retail, according to the Q1 2017 RICS UK Commercial Market Survey.

As investor demand increases for UK commercial property across all sectors, with 18% more respondents reporting a pick-up in enquiries, industrial assets have been most sought after in Q1. 28% more respondents saw an increase in demand for industrial space across the UK in the time period. Overseas investment demand also grew across all sectors in Q1, with buyers again showing a slight preference for industrial space. The industrial sector also performed strongly in terms of capital value expectations with 44% more respondents anticipating prices to rise over the next three months — the highest reading since Q4 2015.

Despite an improvement on the investment side, London is lagging the national recovery as far as the occupier market is concerned. Indeed, rental expectations for the year ahead are negative in both the prime and secondary office sectors across the capital. Secondary retail rents are also anticipated to decline but prime retail space may prove more resilient. Across all other parts of the UK, headline rental expectations remain positive with the East and South East of England displaying the strongest twelve month projections, with prime office and industrial leading the way in each case.

“The results of latest commercial property survey chime with much of the recent generally more positive economic news flow. Significantly, the forward looking indicators are also proving relatively resilient, although it would not be a surprise if activity slows somewhat ahead of the forthcoming general election. Although around one-sixth of respondents continue to report enquiries from British businesses looking to find space to utilise elsewhere in the EU, foreign investment into the UK is continuing to recover with the RICS overseas demand indicator rising for all sectors at a headline level and in most parts of the country.” said Simon Rubinsohn, RICS Chief Economist.

Source: RICS

 

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