UK commercial property continued to improve during October, with capital values increasing by 0.6% over the month, resulting in growth of 2.0% so far this year. Total returns were 1.1% in October and 7.7% over the year to date.
In the retail sector capital values continued to improve, increasing by 0.4% over the month. High street shops, shopping centres and retail warehouse all recorded a positive uplift in capital values, showing some stabilization in this sector.
Capital values in the industrial sector increased by 1.0% over the month, resulting in total return of 1.7% in October. This is the first time that All Industrials has recorded the highest monthly capital value growth since March 2009.
Overall in the office sector total returns and capital value grew by 1.2% and 0.6% respectively during October. All offices from across the country have been contributing to the overall performance of the sector and not just Central London, as had been the case until about March this year. The gap between the performance of Central London and the rest of the UK continued to close in October, although office capital value growth in Central London remains slightly higher than in the rest of the UK.
•2013 has seen the first signs of recovery emerging in the Northern Ireland commercial property market with transactional activity in all sectors up year-on-year.
•A number of significant investment properties have sold recently in Northern Ireland including a Tesco Extra store in Newry, which sold for £30.3 million, reflecting a net initial yield of 4.95%.
•Most of the demand for institutional grade investment properties is emanating from UK investors who are increasingly looking for opportunities in regional markets such as Belfast.
•There has been a steady volume of letting activity in the office sector. Although no large lettings have been signed recently there are several outstanding requirements.
•The news that planning permission has now been granted for a new 7,710m2 (83,000 sq. ft.) Grade A office building at City Quay in Belfast Harbour which is due to go on site shortly is warmly welcomed as this is the first speculative development in the city in over six years.
•In the retail sector, a number of new retail lettings have been agreed several new restaurants have opened recently with 3 new restaurant openings planned on Belfast’s Howard Street in the run-up to Christmas.
•With the annual Christmas market at City Hall and an ice-rink planned for Custom House Square, it is hoped that political tensions can be kept at bay and that flag protests planned over the coming weeks won’t deter from what promises to be a busy Christmas trading period across the region
We are delighted to release the inaugural edition of IN_business. This new magazine takes a look at key trends in the national office and industrial markets. We hear from experts from CBRE's National Team who explore the spike in market we've experienced this year across the UK and implications for future trends. Some of our clients have also contributed to provide further insight into how they are responding to market trends.
Consented land in most regions has experienced price rises over the past quarter as demand for land increases on the back of increasing sales rates.
Government backed funding schemes have improved domestic mortgage markets and accessibility for buyers at all pricing levels, providing developers with sufficient confidence to activate their land buying.
An upturn in UK housing market attributed to economic recovery, improved lending schemes and a shortage of new build supply will help push national house prices up by 17% over the next five years.
At the national level commercial property rents grew by 0.6% over the last quarter continuing the stronger rental growth seen in the last two quarters.
Offices were the best performing sector in terms of rental growth in Q3 2013, as has been the case for each of the last five quarters. The rate of growth was an average of 1.8% in prime rents over the quarter.
The rate at which prime yields are falling across the country continues to accelerate. Overall, the average prime yield dropped by 12 bps in Q3 to 6.08%. The biggest fall was recorded in the industrial sector, where the average prime yield fell to 7.19% at the end of Q3.
The latest dashboard highlights some of the major transactions in the sector together with the team’s view of the market and current trends within leisure. We review the key dynamics of the ground rent investment sector; the new buyer groups acquiring leisure assets and highlight the self-storage sector one of the many specialist leisure markets which continues to evolve.
The first half of 2013 has seen an improvement in the level of demand for office space across the UK city office markets. Take-up across the South East reached 1.46m sq ft, an increase of 7.4% on H2 2012 and 20% up on the same period last year.
Across the regional cities, a total of 1.59m sq ft has been taken in the first half, the highest six month total for five years. Almost all cities saw take-up at or above long-run averages with Leeds, Edinburgh and Aberdeen all above their five year averages.
Supply, particularly for grade A space, continues to diminish. With some speculative development completing in H1, other schemes have begun in Bristol, Glasgow and the Thames Valley. However, a number of other cities could now face shortages of Grade A space.
The last two-to-three years has seen London elevated to number-one global property hotspot. Demand levels in the capital are quite unsurpassed: I have certainly not seen the like before during my career. Central London property markets are literally booming. Rents have surged; premiums are back with a vengeance. Residential price growth has meanwhile proved so strong that a wave of major mixed development activity is now being stirred throughout Inner London.
This special London edition of IN_retail, explores the meteoric rise of the capital during the downturn and why – due in part to simply mammoth infrastructure and public realm improvements – the growth surge is set to accelerate, spilling development into previously moribund markets scattered throughout central and inner London.
This issue covers both mainstream retailing in central London and the suburbs together with an array of huge mixed use developments: schemes set to bring an entirely new vibrancy to swathes of the inner-city. In the articles that follow, our London experts (retail and mixed-development) take a hard look at the seemingly inexorable demand growth for London property, exploring immediate prospects and the longer term opportunities that are beginning to emerge.