Business Monitor International


United Kingdom Real Estate Report

Published 10 April 2014

  • 67 pages
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  • Includes 3 free updated quarterly reports
 
$1,295.00
United Kingdom Real Estate Report

  BMI believes the UK's real estate market will experience strong capital growth in 2015 driven by development profits in the office segment and a recovering retail sector. A strong occupational market and higher consumer discretionary spending have been the impetus behind growth in the two segments. However, greater speculation in the Central London office market has led to concerns of oversupply and higher development cost which we believe are key downside risk factors.

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 UK de-industrialise. However, 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. Developer British Land has looked to rebalance its portfolio from office to retail, while  Land Securities' acquisition of a 30% stake in the Bluewater shopping centre - the number two UK shopping mall by visitors - marked the firm's ambition in the UK shopping market.

Recent Developments

  • In June 2014, Land Securities acquired a 30% stake in the Bluewater shopping centre in Kent for GBP656mn, representing a 4.1% initial yield. Bluewater is the number two UK shopping centre attracting 27mn visitors each year with one of the most affluent catchments in the country. The deal includes the management agreement for the whole centre, which gives Land Securities the flexibility to determine its own tenants mix.

  • In February 2014, Hammerson signed  TGI  Friday's and Cosmo at its GBP20mn leisure extension of the Silverburn shopping...

Table of Contents

BMI Industry View
7
SWOT
8
Political
9
Economic
11
Business Environment
12
Industry Forecast
13
Table: Office Forecast Rents - (GBP per m2/month)
13
Table: Office Forecast Net Yield, 2010-2017 (%)
13
Table: Retail Forecast Rents - (GBP per m2/month)
14
Table: Retail Forecast Net Yield, 2010-2017 (%)
14
Table: Industrial Forecast Rents - (GBP per m2/month)
14
Table: Industrial Forecast Net Yield, 2010-2017 (%)
15
Construction and Infrastructure Forecast Scenario
15
Table: UK Construction And Infrastructure Industry Data, 2011-2016
15
Table: UK Construction And Infrastructure Industry Data, 2017-2022
17
Construction And Infrastructure Forecast Scenario
18
Macroeconomic Forecasts
23
Macroeconomic Forecast
23
Table: United Kingdom - Economic Activity
28
Industry Risk Reward Ratings
29
Developed States - Risk/Reward Ratings
29
Table: Real Estate Risk/Reward Ratings
29
Business Environment Outlook
29
Table: BMI Business And Operation Risk Ratings
30
Institutions
30
Table: BMI Legal Framework Rating
31
Infrastructure
32
Table: Labour Force Quality
35
Market Orientation
35
Table: Trade And Investment Ratings
36
Table: Top Export destinations
38
Operational Risk
38
Market Overview
40
Office
41
Table: Historic Rents - 2011-2012 (GBP per m2/month)
42
Table: Net Yield, 2011-2012 (%)
43
Table: Terms Of Rental Contract/Leases - H212
43
Retail
43
Table: Historic Rents - 2011-2012 (GBP per m2/month)
44
Table: Net Yield, 2011-2012 (%)
44
Table: Terms of Rental Contract/Leases - H212
44
Industrial
44
Table: Historic Rents - 2011-2012 (GBP per m2/month)
45
Table: Net Yield, 2011-2012 (%)
45
Table: Terms Of Rental Contract/Leases - H212
46
Competitive Landscape
47
Company Profile
49
A&J Mucklow Group
49
British Land
51
Hammerson
53
Land Securities
55
SEGRO
57
Demographic Forecast
59
Table: The United Kingdom's Population By Age Group, 1990-2020 ('000)
60
Table: The United Kingdom's Population By Age Group, 1990-2020 (% of total)
61
Table: The United Kingdom's Key Population Ratios, 1990-2020
62
Table: The United Kingdom's Rural And Urban Population, 1990-2020
62
Methodology
63
How We Generate Our Industry Forecasts
63
Construction Industry
64
Bank Lending
65
Real Estate/Construction Business Environment Rating
65
Table: Weighting Of Indicators
66
Sources
68

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.

Key Benefits

  • 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).

Coverage

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.

Market Overview

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.

Market Analysis

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.

Company Profiles

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.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc