The Commercial Property Confidence Monitor, released by Lloyds Banking Group, gathers the views of developers, investors, agents, surveyors and other financial decision makers in the UK commercial property market. Confidence is everything in the property market – it’s what drives it forward and it helps to determine the rates that are charged and the value of property.
The quarterly survey reveals confidence in the market ‘continues to edge upward’, with the most bullish predictions, of course, coming from London-based businesses. In the capital, respondents expect commercial property values to increase by up to double the amount elsewhere, where there is a ‘perception of a static market’ in portfolio performance.
Commercial property activity is expected to pick up over the next 3–6 months by 41 per cent of major businesses, 28 per cent of medium to large, and 14 per cent of small. Although SMEs believe that things will remain static and confidence is obviously high in larger businesses.
Offices and out-of-town retail are two sectors tipped to perform well in the same period.
On the subject of increased investment in commercial property, 82 per cent of major businesses and 54 per cent of fund managers expect to see it in the near future.
Banks remain a significant choice for businesses seeking investment, although small businesses are said to be just as likely to use their own equity. This is ‘a fundamental shift in the dynamics of property funding’ says the report. Three years ago, it says, an estimated 80–90 per cent of the commercial property market relied on banks for funding.
This optimism comes despite respondents’ ongoing uncertainty in the commercial property market and wider economy.
‘The recent spate of retail failures’ alongside a ‘slower than expected economic recovery in the UK and by the events unfolding in the Euro Zone’ are factors highlighted as having an impact on investor confidence.
Despite this, London and the South East are still ‘considered safe havens for global investors in an unstable world economy’.
Lloyds conducted 449 telephone interviews, spanning six commercial property sectors and eight geographic regions across mainland Britain, to gather the data for this survey.
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