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According to a new report on the UK’s property market, the value of commercial property increased last month, amounting to the third month of growth in a row.
The report, by Investment Property Databank, looked at values of offices, warehouses and retail properties, and indicates that confidence in the market is steady and positive at present.
The capital values of commercial property in July increased by 0.2%: total return amounted to 0.8% with offices and industrial returning 1%, and retail 0.5%. The report also showed that the recovery appears not to be just London-based. The retail sector experienced higher returns and an easing of the decline in capital values in the South East, the Midlands and the South West.
However, is has also been found that the rental rates for UK commercial property do not give as much cause for optimism. The rates remained static in July, the 0% figure taking into account both London and the regions.
Sally Brough, Associate Director at Morgan Pryce, says that the report represents the cautious positivity being felt in the market at the moment: “There is no doubt that investors are still interested in the London commercial property market, and this interest is keeping things buoyant at the moment. The fact that rental rates are not increasing may indicate that supply may be catching up with demand after the last few years of reduced building and development, but these things can change month by month, and we will only be able to see a meaningful pattern in a few months’ time.”
One of the factors keeping investors interested in the UK commercial property market is the low interest rates, which the new governor of the Bank of England, Mark Carney, has indicated will remain low unless conditions change – particularly unemployment figures. This kind of guarantee is inevitably going to prove attractive to investors, as it relieves some of the short-term risk – a strategy used by Mark Carney in his home country of Canada.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.