Property News Deals conclude in the regions, but too soon to call it a trend - Colliers International

Property Snapshot

The latest Property Snapshot from Colliers International shows that expectations of a UK recession in 2012 have moderated.

The key findings were:

  • Investment - The year-end exceeded expectations. Prime pricing is stable; secondary is weakening further with more distressed assets expected to reach the market as discounted loan portfolios are sold to investors who will begin to sell piecemeal.
  • Retail - Retail sector performance is not improving, further administrations are expected, rents are falling and landlords continue to brace themselves for further stress.
    Offices - Despite economic weakness, the lettings market has been seeing more activity. Rents are stable and in the West End are linked increasingly to specific buildings, rather than to individual submarkets.
  • Industrial - Prime distribution sheds over 100,000 sq ft are still in short supply. Multi-let industrial parks are seeing limited but steady demand. Landlords are still struggling.
  • Residential - House prices are generally stable, although down marginally year on year. Lending volumes and terms are not improving, which is encouraging the growth of private landlords. Foreign investors are tracking UK economic fortunes closely.

Dr Walter Boettcher, Director of Research & Forecasting at Colliers International commented: “Expectations of a UK recession in 2012 have moderated with a British Chamber of Commerce survey suggesting that a recession is not a foregone conclusion. Further improvement in service sector PMIs from 52.1 in November to 54.0 in December suggests that there is a strengthening in GDP trend.

”Eurozone developments remain a major risk and continue to distort capital market activity and wholesale funding for banks. The latest Bank of England Credit Conditions Survey shows that only a minor improvement in corporate debt availability is expected in Q1 12; real estate debt will contract. EuroHypo and SocGen announced that they were pulling out of the UK market. Inflation is set to fall as base effects from 2011 and the VAT increase begin to impact significantly. In December, CPI fell to 4.8% and RPI to 5.2% with core inflation also down to 3.2%. Interest rates are firmly on hold with further quantitative easing still possible.

“Despite improved UK economic sentiment, eurozone financial issues continue to distort capital markets and undermine consumer confidence.”