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Low supply to push London office rents up

Posted on 22 Sep 2009 | Comments Off

Prime areas will return to growth next year as global markets rebound

Prime rents in London’s City and West End office markets will return to growth in 2010 thanks to flourishing global stock markets and a rebound in tenant demand this summer, property advisor Knight Frank said yesterday.

A sudden drop off in speculative office developments due by 2012 and smaller-than-expected occupier distress in 2009 supports forecasts of a 4 per cent rise in prime City rents to £44 per square foot and a 3 per cent rise in West End prime rents to £67 per square foot in 2010.

City rents, down more than a fifth in 2009, are expected to rise by 37 per cent to £58 per square foot by end-2012.

West End rents, down 30 per cent this year, are set to rise by 42 per cent to £92.50 per square foot over the same period.

Knight Frank said the rapid rent repricing has tempted occupiers back to the market in an effort to exploit the tenant-friendly environment.

In real terms, City rents are at their lowest level for more than 20 years, while West End rents are at a 13-year low, Knight Frank said.

‘The office market is beginning to emerge from the shadow of the banking crisis,’ said Bradley Baker, head of central London tenant representation at Knight Frank.

‘Large Central London tenants from a range of industries are viewing this as the ideal time to act to secure the best deal,’ Mr Barker said.

‘In the large unit market I see the number of very good quality building options diminishing in the next six months,’ he said.

Source : Business Times – 22 Sep 2009

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UK house prices down 1.5% y-o-y in Sept

Posted on 22 Sep 2009 | Comments Off

Asking prices for homes in England and Wales are on average 1.5 per cent lower this month than a year ago, with the available stock at its lowest for 18 months, property website Rightmove said yesterday.

The average asking price rose 0.6 per cent in September to £223,996 (S$513,557), after a 2.2 per cent fall in August, as the lack of supply put upward pressure on the market.

Rightmove said 10 properties were coming off the market for every eight coming on, with would-be sellers deterred from trading up by dwindling property choice and high deposit requirements.

‘Confidence is up, stock is down, and the number of people searching is high,’ said Rightmove director Miles Shipside.

‘There are lots of positives but too few buyers can put down the 40 per cent deposits that are needed in order to secure the best mortgage deals.’ London was one of three regions which saw a month-on-month rise in house prices in August, although they remain 0.9 per cent down on the year at £390,768. Rightmove said evidence suggested activity in the property market was over dependent on those with substantial equity, and warned that lenders cherry-picking these buyers risked prolonging a thin market. ‘Many aspiring sellers could face years trapped in their homes until values rise enough for them to join the equity-rich club,’ Mr Shipside added.

Source : Business Times – 22 Sep 2009