15th February 2011
The survey found that 18% more surveyors expected new sales and lettings to increase in the next three months, a rise from Q3 2010 (+8). This is the best reading since before the onset of the credit crunch (Q1 2007). Meanwhile, 8% more reported a rise rather than a fall in occupier enquiries (compared with -22 previously), suggesting that some businesses may now be looking to expand.
The RICS figures showed that in the last three months of 2010, overall tenant demand for commercial property stabilised with a net balance of zero (from -6). While the picture clearly is improving, surveyors continue to cite uncertainty over the prospects for the economy as a drag on the market.
Turning to supply to the market, just 4% more surveyors saw an increase rather than a decrease in available occupier space (down from a reading of +16 in Q3). In the office sector, available space registered a zero net balance, the lowest since Q4 2007. However, available space continued to edge up in both the industrial and retail segments of the market, albeit at a lesser rate (+5 and +4 respectively). Regionally, London experienced a sharp fall in supply of office space, while industrial property in the South and South East saw declines for the first time in three years.
On the investment side, the survey shows respondents in London seeing capital values rising but readings for the rest of the South, Midlands and North remain negative.
RICS chief economist Simon Rubinsohn says: "While it is true that some optimism is returning to the real estate world, the commercial market still faces significant challenges. Regional variations are becoming increasingly visible with the picture on rents and capital values broadly reflecting the emerging economic recovery. Prime London offices are, and will continue to be, the most buoyant part of the market.
"Meanwhile, secondary offices around the country are a particular area of concern as oversupply will be compounded by likely consolidation in the public sector. On top of this, the general lack of new projects being initiated outside of the capital has important ramifications for regeneration in large parts of the country.''
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