BNP Paribas Real Estate is determined that UK commercial property sector will start its slow yet sustainable recovery next year, according to Mr. Keith Steventon, company’s head of research, who made a speech at BNP Paribas Real Estate economic forecast seminar held in Cardiff, Wales.
He highlighted that the major factor affecting the commercial property sector is UK retail rents, which are under the influence of UK household incomes. As household incomes, according to forecasts, are expected to fall in 2011 and to grow in 2012, the commercial property sector is to follow the same trend. Thus, Mr. Steventon expects retail rents to fall by 10% and 5.8% in 2009 and 2010 respectively and then to rise by 1.2% and 6.8% in 2011 and 2012 respectively. His forecast for the offices sector is as follows: 4.8% and 3.6% decline in 2009 and 2010 respectively followed by 1.4%, 1.9%, and 6.4% growth in 2011, 2012, and 2013 respectively.
Mr. Steventon is determined that rent rates for prime properties will recover more quickly as there are few prime commercial properties developed in Wales. Meanwhile, logistics occupier market rent rates will take longer to recover as a result of bigger void rates.
At the moment, falling rent rates in Wales are having a negative effect on capital values, which fact results in further declines in property values. As such, capital values of properties in the industrial sector fell by 6.4%, while retail and offices sectors saw declines of 6.3% and 5.3% accordingly.
The good news is that the capital values in all commercial property sectors are to recover in 2010, according to the national forecast. The industrial sector is said to see a rise of 8.7%, offices sector – 7.3%, and retail sector – 4.7% in 2010.
Offices to Let
Friday 16 October 2009
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