The post mortem on the U.K.’s General Election is now well underway. The Conservative Party, led by Prime Minister Theresa May, was widely expected to increase its majority. Instead, it lost seats and only remains in control of the government with the support of the Democratic Unionist Party (DUP), from Northern Ireland, with only 10 Members of Parliament. Several explanations have been advanced in the wake of this result. A poor campaign and policy U-turns on the part of the Conservatives along with public dissatisfaction with the ‘hard Brexit’ that they had been pursuing whilst in government. A high turnout amongst younger voters who tend to be favour E.U. membership and are inclined to vote for the left-leaning Labour Party which promised, amongst other things, the abolition of fees paid to study at university.
City office rental values fall for second month in May Capital values increased 0.4% at the All UK Property level in May 2017. Across the UK rental values rose 0.1% on average over the month. Rental value growth in the Office sector (0.1%) was outpace by the Industrial sector with a 0.2% rise over the month.
The spread of transactions since we issued our last yields in early March reflect the broad nature of the residential investment market. Reported deals reflect capital committed of more than £450m ranging from Invesco’s purchase of the 580 apartment Westrock portfolio, to land deals by L&G in Leeds and Greystar re-enforcing confidence in the Nine Elms area in London by buying two parcels of land from Royal Mail. Add to that L&G and Notting Hill Housing’s forward funding deals in Bath and Stratford plus Sigma’s successful start to trading as a REIT we have witnessed almost the full gambit of structures within a 3 month period. · The depth of appetite for stock remains with further new overseas investors looking to make their mark in the sector. This is reflected in the £600+ million worth of deals currently under offer. · Hence positive sentiment stays intact and we are beginning to see trends emerge where tightening of supply is driving down yields in regional markets that have traditional constraints on development.
UK commercial property prime rents up 0.8% in Q1, boosted by Industrials Rental values in UK prime commercial property increased by 0.8% in the first quarter of 2017. 11% of monitored locations recorded increasing rents, while 7% recorded decreasing prime rents. Prime yields for All Property remained relatively flat, falling -4bps and maintaining 5.4% in Q1 2017.