Commercial property developers turn positive in January – Savills
Savills says UK commercial property developers have become positive about the future, for the first time in eight months. The firm’s commercial development activity index for January recorded a positive sentiment reading of +1.2%, a sharp improvement from the –7.1% reading for December. About 19% of the developers surveyed for the report expect activity to increase during the next three months, compared with 17% who expect a fall.
Of the developers surveyed for Savills’ report, 22% reported a decline in overall activity in January while 18% recorded an increase. The Total Commercial Development Activity Index for January came in at a net balance of –3.9% compared with a reading of –17.8% the previous month.
Savills says the slower overall contraction in January reflected growth of work on private-sector projects and “a marked easing in the decrease in public-sector activity”. However, it noted that only one of the nine subsectors surveyed – refurbishment – reported a rise in activity. “That said, all categories recording a decline noted a weaker rate of decrease,” it added. Private-sector contracts to develop retail premises and leisure properties saw the smallest decline in activity, while the sharpest falls were in public-sector categories.
Michael Pillow, head of building consultancy at Savills, said: “The new year has seen a return to optimism amongst developers. We expect 2012 to be the year that rents start to rise outside London, and this should stimulate some renewed interest in starting stalled schemes.”
