Development outlook turns negative
The outlook for commercial development activity has turned negative for the first time in 12 months, according to Savills, which has published its latest Commercial Development Activity report. The lack of funding for new projects and worries about the outlook for public-sector demand were cited by those surveyed as reasons for their negative viewpoint.
Savills says that the index measuring expectations of activity over the next three months dropped to minus 1.2% in July, down from +5.3% in June, thus recording the first negative result since July 2009. Of the three main sectors monitored, developers were most pessimistic about office activity, followed by retail & leisure, Savills says. On balance the firms surveyed expected growth in industrial/warehouse activity.
Savills says that while the pace of commercial property development activity rose in July, the increase was only marginal and followed a modest reduction in June. Growth was driven by private-sector demand, as public-sector development continued to fall sharply. The Total Commercial Development Activity Index – the net balance monitoring the overall performance of the UK commercial property sector – came in at +0.6% in July, up from minus 2.8% in June. The latest net balance was much lower than the long-term survey average of +5.3%.
