CFI: Opinion RATES START AT 3%
Why the industry will settle for ‘benign’
by George Patellis, CEO Tiuta
recent statistics suggest that demand for commercial property declined in the third quarter of 2010 with 16% more surveyors anticipating rents to fall as opposed to rise over the coming quarter. according to revelations
from the latest ricS commercial market Survey, after a positive start to the year, occupier demand fell for the second consecutive quarter in Q3 2010, although the net balance was slightly less negative at -7,compared to -9 in Q2. demand for office space showed the greatest decline, falling to -14, after growing to +19 at the beginning of 2010. When evaluating the commercial sector we also have to break it down regionally. Harking back to the ricS report supply to the market continued to increase at roughly the same pace as previous three months. the biggest rises occurred in the midlands and the north, while available space broadly stabilised in London and the South West. office space increased at the greatest pace with 23% more chartered surveyors reporting a rise than a fall in availability. in terms of contributing most to the overall recovery
in their regions, analysis from Barclays says that Smes in London and the South West come out on top, which is largely owing to their exposure to external markets. However, the analysis also highlights the key strengths of small businesses in the regions. Looking at the commercial
market as a whole and, generally speaking, the drop off in demand seems not too dissimilar to the rest of the mortgage market. despite these figures capital economics’ chief property economist ed Stansfield still believes that commercial property is now looking relatively well valued compared to bonds, equities and residential property. He added that the uK’s economic recovery will remain ‘sluggish’, inflation worries will ease and the Bank of england base rate is likely to stay low, helping to create relatively benign conditions for the uK commercial property market. Benign may not be the
sexiest terms in business but when it comes to the commercial market after several years of toil benign conditions are certainly welcomed. as with all sectors, competition is key to generating more activity so that brokers and their clients can have access to a wider range of deals based on sensible criteria. But any small steps are appreciated.
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www.commercialfinancials.com mortgage introducer DECEMBER 2010 37
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