South-East offices undervalued
Knight Frank says the market for office space in South East England may still be undervalued, as the UK pricing recovery that started last year has not happened at the same pace in this region as elsewhere in the country.
The group’s annual M25 Office Market Research Breakfast today at The Dorchester discussed the implications of the still uncertain election outcome and the prospects for the office market in the South East. Head of research Clare Higgins says that while the economic outlook is still uncertain in the near term, there is a consensus that the worst is over, “if only in the sense that we’re unlikely to see another year of contraction approaching -5%.”
Knight Frank forecast that there would be three consecutive years of average rental falls, “and we stand by that today,” Higgins says. One of those three years has now passed, and the third year (in 2011) will be relatively benign, she forecasts. Knight Frank is predicting a total return for offices in the South East of 9.1% for 2010 and a fairly steady performance beyond that with a forecast of total returns averaging 8.5% for the period to 2014.
“But the enormous caveat to these forecasts is that our economic recovery is not derailed either by global events or, indeed, by our own government. In reality, near-term performance may be entirely out of our hands, but there is real potential for medium-term recovery to be steady,” she adds.
