Slow growth keeps impacting on commercial property sectorNovember 15th, 2012 Category: Building Management
Britain's commercial property market is continuing to be hit by difficult conditions in the economy, a new report has revealed.
According to global information firm IPD, occupier demand across the UK has been sluggish over the last year because of minimal economic growth.
The organisation's latest monthly property index indicated that the fallout from ongoing austerity cuts are also putting the brakes on the market at the moment.
This has contributed to a 3.5 per cent decline in commercial property values across the UK during the year to October 2012.
Phil Tily, managing director of IPD in the UK and Ireland, commented: "12 months of falling capital values marks another rather unfortunate milestone for the UK property sector, but there has been some improvement in underlying performance for the last few months."
However, he said occupier demand is still "extremely unsteady" and is likely to remain so for some time.
Of course, there has been some positive news in the last months, such as an upturn in growth that meant the UK has now emerged from its double-dip recession.
Nevertheless, Mr Tily pointed out that for every positive indicator on the country's economic performance, another one is likely to cause dismay.
This, he said, is harming the commercial property sector in many places outside London, so it remains to be seen how long it will be before regional markets pick up over the next few years.
London and the south-east have been bucking the wider trend for some time now, so it should be interesting to see how demand for office blocks, shopping centres and other types of commercial property in the region will hold up in the near future.
Mr Tily predicted that the UK's economic recovery will be slow and difficult – a forecast similar to that offered by Bank of England governor Sir Mervyn King earlier this week.
He added that investors should nevertheless be thankful because market conditions could actually have been much worse.