UK Property news 19th June 2014

UK commercial activity rose for the twenty-first month in succession during May, with the pace of expansion accelerating since April, according to Savills. Up from +23.6% in April to +26.9% in May, the headline Total Commercial Development Activity Index – a net balance monitoring the overall performance of the UK commercial property sector – was consistent with a marked pace of growth.

Stronger increases were noted for both private and public commercial projects, with the respective net balances rising from +35.3% and +1.6% to +37.8% and +10.3%. All nine monitored sub-categories registered higher activity. The fastest rise was again registered for private new build work.

FUTURE EXPECTATIONS
UK commercial developers remained optimistic regarding future commercial activity. Although slipping from April’s three-month high, the Future Expectations Index still pointed to a strong level of positive sentiment. Improving client confidence, better economic conditions and increased availability of finance were cited by panellists as factors expected to support growth of commercial activity in three months’ time. At +24.8% in May, the net balance for future expectations declined from +35.2% in the previous month.

Public office projects returned to growth in May, the agent said, following a stagnation in the previous month. The pace of expansion was, however, marginal. May data indicated that both public and private retail & leisure work increased. The respective net balances posted +3.4% and +22.8%. As has been the case since September 2012, all three UK regions posted growth of commercial activity in May

Simon Collett, head of building & project consultancy at Savills said: “The South East and the Rest of the UK continue to report marked expansions in development activity as they play catch-up with London, which posted further growth over the month. Activity in the regions is still in recovery, with broad-based increases being sustained. This goes some way to explain why the report highlights a sharper expansion in May.”