As commercial property development reaches new heights, a recent study has shown Simon Morris that confidence levels in UK commercial property rose throughout August 2015.
It’s become clear to Simon Morris that the UK economy is going from strength to strength right now. Evidence from the BBC’s GDP tracker indicates that the UK’s economy expanded 2.6% in 2014, an expansion which has driven the country’s commercial sector to new highs.
This has spurred a rise of commercial property development activity. As Simon Morris recently noted, a report from the Royal Institution of Chartered Surveyors indicated that 44% of surveyors saw a rise in construction activity levels in the second quarter of 2015. This rise spurred in no small part by an increase in office property development activity throughout the quarter.
Confidence levels grow
Invezz.com reported that independent UK real estate advisor Investment Property Forum (IPF) have released their latest UK Consensus Forecasts. This is a forward-looking study involving more than 25 leading fund managers and advisors, which found that their confidence in the UK’s commercial property sector grew throughout August 2015.
The forecasts indicated that city office returns are now expected to reach 19.9% in 2015; a rise of 3.5% form the last forecasts in May. By polling fund managers and advisors, IPF determined that West End office returns should hit 18.8%, and that nationwide office returns are forecasted to reach an impressive 17.9%. IPF further predicted that the UK’s industrial property market will record a yield rate of 15.4% in 2015, whilst the standard retail sector was put at 12.1%.
Uplift in sentiment
IPF research director Pam Craddock spoke out on the release of the forecasts. She said that “there has been a marked uplift in sentiment, particularly towards London offices, in recent months, which underlines the strong fundamentals of UK real estate.”
Craddock went on to note: “Respondents predict that Britain’s underlining recovery could further bolster retail property, which has so far lagged behind other sectors. With wages now rising, consumer spending increasing and recovery spreading out, retail property is the only sector predicted to show increased rental growth next year.”
Set to grow
In Simon Morris’ opinion, these forecasts indicate that the UK’s commercial property sector may be set to record growth volumes throughout the rest of 2015. We’ve already seen how robust market activity has boosted commercial, particularly office, property development in the first three quarters of 2015. With returns expected to continue growing, commercial property development levels may remain high throughout the rest of the year.