by Shane Henson — August 5, 2011—Increasing regional variation in the U.K. commercial property market became apparent during the three months to June, as London’s real estate strongly outperformed the rest of the United Kingdom, says the latest RICS UK Commercial Market Survey, conducted by the Royal Institution of Royal Surveyors.
Strong differences in the levels of available floor space across the U.K reflected the differing state of the market across the country. In London, availability stabilized at a net balance of +2 percent; however, in northern England it rose to +22 per cent. Chartered surveyors in the north of the country attributed this to fewer companies looking for space, due to the economic downturn.
As a result of this growing availability, the number of incentive packages offered by landlords to secure a letting continued to increase in Q2, albeit at the slowest pace in almost four years. Throughout the U.K., the Midlands and Wales saw the greatest number of incentives, whereas London experienced a fall, driven mainly by the office sector.
RICS Chief Economist Simon Rubinsohn said the striking feature of the latest RICS survey is the divergence in responses they received from London and the rest of the country.
“Moreover, this starkly contrasting picture is expected to persist for some time, reflecting the markedly different economic picture in the capital,” Rubinsohn noted. “While the London property market will continue to enjoy the trappings of recovery, in many other parts of the U.K. it could feel as if the icy winds of recession are continuing to bite. More surveyors are projecting price falls rather than rises. Once again, however, the picture in London appears rather more upbeat.”
