Two-paced recovery – Lambert Smith Hampton
Lambert Smith Hampton notes that while recent economic data suggests a continued slow improvement during the second quarter of 2013, the recovery in the property market appears to be two-paced, with London and the South East performing better than the rest of the UK.
Monthly IPD data shows that the rate of decline in all property capital values has slowed to its lowest level since September 2012, but the relative outperformance of the economy in London and the South East can also be seen in the performance of the property markets, Lambert Smith Hampton says. “Therefore, we do not expect a straightforward recovery in the property markets through the rest of the year,” the firm adds.
Banks are still retreating, with net lending to commercial property negative in Q1 2013 for the seventh quarter in a row, LSH points out. “This is putting a stop to development activity in most parts of the country, especially where the risks to the occupier market are greatest,” it says.
Development of Central London offices, however, is at a four-year high, the firm says, with around 10m sq ft of space currently under construction. About a third of this is let and the remaining two thirds are being developed speculatively. LSH says that the increase in space under construction shows that developers – and those providing the finance – are feeling more positive about the prospects for Central London offices in the next 18 to 24 months, “although current take-up levels are still relatively muted”.
