United Kingdom Real Estate Report Q3 2011
Includes 3 FREE quarterly updates
The outlook for the UK commercial property sector is definitely more positive for 2011 with most commentators indicating improving sentiment and indeed rentals and leasing success in the second half of 2010. However, conditions are still vulnerable to an easing in positive sentiment and indeed we do expect there will be weak periods within the underlying trend of improving conditions. Thus BMI is comfortable in taking a more cautious outlook for the commercial property sector in the UK, forecasting similar overall conditions to 2010.
BMI sees the UK economy expanding by 1.7% in 2011, strengthening to 2.2% in 2012. However warning signs for the UK economic recovery started flashing again with the release of Q410 GDP data, which surprised even the most bearish commentators. The economy contracted by 0.5% quarter-onquarter (q-o-q) during the fourth quarter. The Office for National Statistics was at pains to stress the impact of adverse weather conditions in December, which impacted the construction sector. The economic recovery in the UK remains somewhat tentative which will make tenants more cautious.
London landlords have had to contend – directly and indirectly – with the problems of the financial services sector (which has since enjoyed a temporary boost to its fortunes as a result of the extraordinary easing in monetary policy by central banks around the world before, during and after the global financial crisis). At the margin, the relocation of businesses from London to cheaper parts of the country must also be impacting the commercial real estate market.
Over the coming year and the forecast period as a whole, we anticipate that yields for commercial real estate in the UK will basically track sideways. Rental rates and capital values will, for the most part, move together. In the short term, our in-country sources indicate that they are not looking for yields to change much over the next year or so. Yields have adjusted to the post-crisis economic environment in the UK.
The outlook for the UK commercial property sector is definitely more positive for 2011 with most commentators indicating improving sentiment and indeed rentals and leasing success in the second half of 2010. However, conditions are still vulnerable to an easing in positive sentiment and indeed we do expect there will be weak periods within the underlying trend of improving conditions. Thus BMI is comfortable in taking a more cautious outlook for the commercial property sector in the UK, forecasting similar overall conditions to 2010.
BMI sees the UK economy expanding by 1.7% in 2011, strengthening to 2.2% in 2012. However warning signs for the UK economic recovery started flashing again with the release of Q410 GDP data, which surprised even the most bearish commentators. The economy contracted by 0.5% quarter-onquarter (q-o-q) during the fourth quarter. The Office for National Statistics was at pains to stress the impact of adverse weather conditions in December, which impacted the construction sector. The economic recovery in the UK remains somewhat tentative which will make tenants more cautious.
London landlords have had to contend – directly and indirectly – with the problems of the financial services sector (which has since enjoyed a temporary boost to its fortunes as a result of the extraordinary easing in monetary policy by central banks around the world before, during and after the global financial crisis). At the margin, the relocation of businesses from London to cheaper parts of the country must also be impacting the commercial real estate market.
Over the coming year and the forecast period as a whole, we anticipate that yields for commercial real estate in the UK will basically track sideways. Rental rates and capital values will, for the most part, move together. In the short term, our in-country sources indicate that they are not looking for yields to change much over the next year or so. Yields have adjusted to the post-crisis economic environment in the UK.
Contents
Executive SummarySWOT Analysis
UK Real Estate/Construction Industry SWOT
UK Economic SWOT
UK Business Environment SWOT
Real Estate Market Overview
Table: United Kingdom Real Estate Market – Historic Rents, 2009 And 2010 (m2/month, GBP)
Table: United Kingdom Real Estate Market – Net Yield, 2010 And 2011 (%)
Table: United Kingdom Real Estate Market – Terms Of Rental Contract/Lease, Mid-2010
Table: United Kingdom Real Estate Market – Available And Vacant Space, Mid-2010 (m2, unless stated)
Industry Forecast Scenario
Real Estate Outlook
Table: United Kingdom Real Estate Market – Rentals, 2010-2012 (m²/month, GBP)
Table: United Kingdom Real Estate Market – Forecast Net Yield, 2008-2015 (%)
Construction Industry Outlook
Table: UK Construction And Infrastructure Industry Data, 2007-2015
Table: UK Construction And Infrastructure Industry Data, 2012-2020
Special Events: Olympic Games
Macroeconomic Outlook
Table: United Kingdom - Economic Activity, 2008-2015
Business Environment
Real Estate/Construction Business Environment Ratings
Table: Europe Real Estate/Construction Business Environment Rating
The UK’s RECBER
Project Finance Ratings: Outlook For Developed States
Table: Design And Construction Rating
Table: Commissioning And Operating Rating
Table: Overall Project Finance Rating
UK’s Business Environment
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Labour Force Quality
Table: Trade And Investment Ratings
Table: Top Export destinations
Competitive Landscape
Company Monitor
A&J Mucklow Group
British Land
Hammerson
Land Securities
SEGRO
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Project Finance Ratings Indicators
Table: Design And Construction Phase
Table: Commissioning And Operating Phase – Commercial Construction
Table: Commissioning And Operating Phase – Energy And Utilities
Table: Commissioning And Operating Phase – Transport
Sources . 64 Skip to top