The Swiss RE building, known as the Gherkin, is pictured from a nearby office block in the City of London April 7, 2010.Reuters / Luke MacGregor
- RICS UK Commercial Market Survey finds both domestic and foreign investment demand at the national level has picked up
- But sentiment in London is more cautious: Nearly three-quarters of UK surveyors believe Central London’s office market is in some stage of a downturn.
LONDON — Uncertainty is growing within central London’s commercial property market, with nearly three-quarters of respondents in a new survey suggesting the market is heading towards a downturn.
73% of surveyors responding to RICS’ quarterly UK Commercial Market Survey said the central London market was at some stage of a downturn, while 67% of respondents said the market is overpriced.
Issues currently dampening demand for hyper-expensive commercial London property include a market which looks fully-priced, as well as uncertainty surrounding the future of London’s role as a global finance hub after it leaves the European Union.
Simon Rubinsohn, RICS chief economist said: “The feedback to the … survey reflects some of the broader macro issues, with the underlying momentum in the occupier market a little firmer further away from the capital.”
Rubinsohn also played down fears an interest-rate hike from the Bank of England — likely to occur next month — will damage the commercial market significantly.
“A key issue going forward will be how the market responds to the likely first interest rate rise in a decade next month,” he said.
“Given that expectations are only for a modest tightening in policy, the likelihood is that it will be able to weather the shift in the mood music. But this remains a potential challenge if rates go up more than is currently anticipated.”
At a national level, there was a pick-up in both domestic and foreign demand. 20% of respondents saw an increase (rather than decline) in investment enquiries across industrial, office, a up from 10% in the second quarter.
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