Property News Research & Forecasting Paper

Property Snapshot

The latest Property Snapshot from Colliers International shows that UK recession is not a foregone conclusion; risk appetite is up as technology companies begin expansion, setting a tone for the corporate sector.

The key findings were:

  • Investment - January transactions suggest a slow start to the year with UK institutions continuing to exercise caution and foreign investors buying opportunistically. Pricing for secondary is weakening, but not enough to boost transaction volumes.
  • Retail - Retail sector performance is still not improving, further administrations are expected, rents are falling and landlords continue to brace themselves for further stress.
  • Offices - City fundamentals may have weakened, although limited supply is supporting rents. West End space also remains tight and is spurring interest in non-core Central London locations. Technology companies may begin to expand
  • Industrial - In 2012 so far, leasing demand and development look to be somewhat off pace due to lack of confidence, but also due to lack of quality facilities. The development pipeline remains very limited.
  • Residential - House prices are stable, but down slightly year on year. Lending volumes are still low, but improving with first time buyers still locked out. Private landlords continue to grow market share. Foreign interest is reaching beyond London.

Dr Walter Boettcher, Director of Research & Forecasting at Colliers International commented:

“The first estimate of Q4 11 GDP growth showed a 0.2% q/q decline. Nevertheless, expectations of recession in 2012 have moderated with PMI data suggesting growth in Q1 12. Services led the trend increasing from 54 in December to 56 in January.

“Capital and wholesale funding market stress moderated substantially with the ECB injection of almost €500bn into the European banking system via its Long-Term Refinance Operation and a new credit crunch has been averted. Another similar injection is expected in February with banks keen to take three year loans at 1% to bridge interbank lending gaps.

“Despite positive economic news, the MPC will undertake further quantitative easing given on-going perception of economic headwinds and with inflation falling rapidly; CPI and RPI registered 4.2% and 4.8% respectively.

“UK economic sentiment should begin to improve given falling inflation, further QE, decisive ECB action to inject liquidity into the banking system and better economic news from the US.”

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