According to latest RICS UK Commercial Property Survey
HONG KONG, April 23 /PRNewswire-Asia/ -- There are signs of a turn around in some sectors of London's commercial property market, pushing rental expectations for London offices up at the fastest rate in over 2 years, says the RICS' UK Commercial Property Survey Q1 2010.
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Rental expectations rose dramatically for London offices moving above zero for the first time since Q4 2007 as available space declined for the second consecutive quarter. This is the first time more RICS surveyors have reported an anticipated rise in rents for two years. The positive net balance of 57 percent (compared with the previous reading of zero) for central London office property was the biggest upward jump on record. This contrasts with the picture in the rest of the UK where available space is rising across all sectors and rental expectations are still negative.
Commercial property lettings activity continued to pick up across office and industrial property for the second consecutive quarter, although investment demand has moderated somewhat outside the London metropolitan area. The retail sector continues to languish, particularly in the capital where rising available space continues to weigh on rental expectations.
Confidence in the outlook for lettings increased, but sentiment was slightly less buoyant than at the end of the fourth quarter of 2009. Some surveyors voiced concerns over the impact on regional lettings activity of public sector employment cuts following the upcoming election.
Also, there is a changing balance of power between landlords and tenants. Growth in inducements being offered by landlords to secure a letting has moderated across all regions and sectors. In central London, 45 percent more surveyors reported a fall rather than a rise in inducements for offices compared to 9 percent in the fourth quarter.
Commenting, Oliver Gilmartin, RICS senior economist said:
"The latest results suggest that a still modest recovery in lettings demand has greatly lifted rental expectations for London offices where development has floundered in recent years due to a dearth in development finance.
"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 most notably in London and the South. Office lettings activity continues to rise modestly across the country although surveyors still remain cautious. Indeed, there are worries that some regional office markets could suffer a setback as public sector employment cuts weigh on demand, whoever wins next month's election.
"Growth in investment transaction activity continued in Q1 albeit at a slower pace outside the capital. The stronger the price gains this year the less scope for further rises in 2011 without a corresponding rental recovery. Indeed, the investment recovery may be reined in by rising borrowing costs in the event of a hung parliament.”
Commenting on Hong Kong market, David Faulkner, RICS Hong Kong Chairman said:
"With vacancies falling in prime buildings during the past quarter, Hong Kong landlords have been able to raise rents. Whilst new tenant demand remains weak, tenants who wish to consolidate their operations into larger space have few options available. The new supply in Island East and Kowloon Bay is being taken up rapidly and rents are expected to increase further during the remainder of 2010.”
For further details, please download the full report from: http://www.ricsasia.org/newsDetail.php?id=188
About RICS & RICS Asia
RICS (Royal Institution of Chartered Surveyors) is the mark of property professionalism worldwide. It covers all aspects of property, construction and associated environmental issues. RICS has 140,000 members globally and represents, regulates and promotes the work of property professionals throughout 122 countries.
The RICS Asia supports a network of over 11,000 individual professionals across the Asia Pacific region with an objective to help develop the property and construction markets in these countries, by introducing professional standards, best practice and international experience. It promotes RICS and its members as the natural advisors on all property matters. It also ensures that services and career development opportunities are provided to members.
The RICS Asia region covers national associations and local groups locating in Brunei, Malaysia, Singapore, Thailand, The People's Republic of China and the SAR Hong Kong. It also has members working across the region such as Bangladesh, Bhutan, Burma/Myanmar, Cambodia, Indonesia, Japan, Kiribati, Laos PDR, Macao, Mongolia, Nepal, North Korea, South Korea, Taiwan, The Maldives, The Philippines, Timor East and Vietnam. For more information, please visit: http://www.ricsasia.org .
Media enquiry, please contact:
RICS Asia Public Relations Representative
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Tel: +852-2372-0090
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