THE Government’s Comprehensive Spending Review is expected to reduce public spending across most Government departments. While the impact of these upon the UK economy is uncertain, some fear that they will result in a return to recession.
The UK commercial property market has shown signs of fragile recovery.
Rental growth forecasts across office, retail and industrial sectors show little recovery until 2013/14.
The office sector will lead, with predicted gains exceeding 5% a year from 2013, while retail and industrial growth is not predicted to pass 3% a year.
The rebound in capital values seen following previous economic downturns is over. The property investment market is led by equity investors seeking prime, well-let, high- quality property with long leases.
A dearth of supply has resulted in competition for the best investments.
Regional markets have seen some activity over the last year, but there is a clear focus on London and the South East.
Secondary investment markets are proving more difficult and a two-tier market has evolved.
Development is increasingly difficult across all sectors.
Many schemes are unviable as a result of the reduction in rents, the softening of yields for all but the best products, land owner aspirations on value and the lack of development finance from the banks.
Investors are able to buy good quality existing new buildings at less than the cost of building new developments.
The acquisition earlier this year of The Vault distribution building, in Speke, by discount retailer B&M Bargains, evidences this opportunity.
Within the Liverpool city region, the occupational market remains difficult with few large enquiries across office and industrial sectors.
However, a recent survey by Actium Consultant/King Sturge, which reviews total occupational costs of office property across the UK (including incentives), showed that Liverpool provides one of the most cost-effective office locations in the country.
This provides an opportunity to attract footloose inward enquiries seeking to set up or relocate.
The agencies involved in promoting inward investment to the city should use this data positively to reinforce the Liverpool offer.
