London and UK Property News – Kalmars Commercial

APRIL 2010

MARKET UPDATE OVERVIEW

After the problems of the last 20 months there is now a widespread improvement in confidence in all areas of the property market. The Southbank with its rich diversity of uses and the Shard of Glass rapidly coming out of the ground amongst other regeneration that is happening is likely to see growth during the course of 2010 as this confidence filters through to demand and the finance becomes more widely available. The office market has seen an increase in the number of enquiries; yields fallen very significantly for investments, quality shops are letting quickly and a wide range of diverse uses are taking up secondary and tertiary positions. Whilst industrial demand remains light, much of the supply is taken up by Evangelist Church requirements that have an insatiable demand. Likewise, demand for colleges and accountancy training is very strong, filling many business centres in tertiary positions.

OFFICES

Although Southbank area has done much better than the City, Canary Wharf and West End, because supply has been low, problems of those other areas over the last 20 months have had a knock on effect and values have fallen by about 15% for top values from the peak in 2007. Top specification space in the City is letting at around £40 psf, local market at around £25 psf with reasonable quality space being around £20, outside the central office core rents range from £10 to £17 psf p.a. or on a sales basis £300 psf for central quality space down to £125 psf in non-office areas.

INDUSTRIAL

There is virtually no new stock coming on and second hand space lets slowly but surely much of the slack being taken up by Evangelist Churches desperate for more space. Rents have fallen from around £13 psf to £10 for quality space and £7 for secondary accommodation. Capital Values likewise have dropped from around £175 psf for £125 for better space and £80 psf for secondary buildings.

RETAIL

Demand for shops is generally reasonable and for restaurants and other similar uses good. Rents for prime space are around £70 psf p.a. and for secondary locations around about £25 psf, with rent free periods of around 6 months.

There are variety of other uses including the Metropolitan Police, medical practices, taking significant areas of secondary space.

RESIDENTIAL SALES

Residential sales have improved dramatically over the last 12 months two substantial developments we have been marketing have pre-sold at or near their asking terms. Generally prices are now around £250,000 for one bedroom house, £325,000 for two bedroom and £375,000 for three bedroom apartment and much higher for special developments. We anticipate values will start to rise as with continued confidence and growth in the area, but limited supply as recent new developments have been very limited.

RESIDENTIAL LETTINGS

Due to the large supply, that occurred as owners are switched to letting rather than selling around a year ago there was surplus of rented space, but as confidence returns is altering in a landlords’ favour and rents have firmed up and are likely to rise during the course of this year. A typical one bed flat in the London Bridge area is letting at around £225 per week, two bed £300 and three bed £400 per week.

KALMARs Commercial

KALMARs Residential

APRIL 2010