BMI View: T he UK commercial real estate market is well placed for further expansion over H214 and into 2015 as a strong economic rebound supports demand for office and retail space in particular. The industrial segment will remain the underperformer as export activity continues to flag.
Falling unemployment and increased levels of household spending have provided support for rental rate growth in the two segments. While we expect the office segment and high quality retail space to outperform, rental growth in the industrial segment is expected to remain largely the same. This is because demand for manufacturing space has declined as the UK de-industrialises and a sluggish eurozone recover demands export demand. However, a lack of supply in logistics and other retail facilities means that rental rates for the industrial market are likely to hold steady over the coming quarters, while at the lower end of the market, significant opportunities exist in the high-growth industrial space such as urban and edge-of-town distribution centres for small load deliveries as e-commerce evolves.
We believe near-term value driver continues to be in the office segment in central London but the positive growth momentum will gradually transit to the retail sector as retail spending drives higher occupancy and rents in quality shopping malls. Futhermore, speculative investment in the Central London Office market has led to growing concerns of oversupply, while the capital has recently overtaken Hong Kong as the most expensive location for international firms to base staff, according to a recent study.
We note the increasing regionalisation of the UK commercial real estate sector as firms look to diversify rental and investment activity away from the capital in an effort to lower costs. H114 saw particular growth in office take-up in Manchester in particular, while smaller regional markets, such as Cardiff have also witnessed strong growth in leasing activity.
The United Kingdom Real Estate Report features Business Monitor International (BMI)'s market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.
BMI's United Kingdom Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in United Kingdom.
- Benchmark BMI's independent real estate industry forecasts for United Kingdom to test other views - a key input for successful budgeting and strategic business planning in the British real estate market.
- Target business opportunities and risks in United Kingdom through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI's key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.
Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors.
Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.
Industry Forecast Scenario
Historical data series (2010-2012) and forecasts to end-2018 for the domestic real estate industry and for the local and global finance industry. Indicators include:
Real Estate: Office, retail and industrial real estate yields for all major cities (%); short-term forecasts on minimum and maximum real estate rental prices by sub-sector (US$ per square metre, and local currency per square metre)
Construction: Industry value (US$bn); contribution to GDP (%); employment (`000); real growth (%)
Economy: Economic growth (%); nominal GDP (US$bn); unemployment (%); interest rates (%); exchange rate (against US$)
Business Environment Rankings
BMI's Real Estate Business Environment Rankings provide a country-comparative Risk-Reward Rankings index aimed at investors (real estate vendors, construction companies and financial investors) in the regional real estate market.
The rankings methodology makes sophisticated use of over 40 industry, economic and demographic data points.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses.
The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.