September 10, 2001—The latest figures from international property adviser GVA Grimley indicate that average rental growth for commercial property in the UK over the next five-year period will be 2.7% annually rather than the 3.7% forecast at the start of this year.
The reports, Property Market Forecasts and Economic and Property Market Review, show that prospects for all three commercial sectors—offices, retail and industrial—have been downgraded to reflect the expected impact of weakening economic performance in the US and UK economies.
Stuart Morley, head of research at GVA Grimley, commented: “Our figures indicate that rental growth will weaken over the next two years, bottoming out in 2002/3, before recovering in the subsequent two years. However, growth should remain positive throughout the forecast period. And some sectors, particularly the London offices market, continue to perform relatively well. Overall, despite a market slowdown in the central London office market over the next two years, London is still expected to remain the best performing market over the next five years.”
Other principal findings of the research were that the office sector continues to be the strongest performer with prime rental growth of 10.2% over the last 12 months, led by strong performance in the central London market. Average rental growth for the retail sector over the next five years is forecast at 2.6%, with central London expected to out-perform other regions.
The GVA Grimley prime rental database shows rental growth holding up well in the industrial sector. There are strong regional variations however, with particularly strong growth in London, the South East and Scotland contrasting with low levels of growth in the North of England and the South West. Regarding future prospects, GVA Grimleys new figures revise predictions for growth in the sector downwards, with an average annual rise of 2.8%.
—Anna Lagerkvist
Reprinted with permission; copyright 2001 i-FM
