UK Commercial Activity Up but Growth Slows [Report]

According to a new report from leading real estate consultancy Savills commercial activity in the UK rose in January for the 5th straight month. Sounds great until the next bit of the report tells you that the growth was not only slight, but was the slowest pace of growth since the current period of growth began...

According to a new report from leading real estate consultancy Savills commercial activity in the UK rose in January for the 5th straight month. Sounds great until the next bit of the report tells you that the growth was not only slight, but was the slowest pace of growth since the current period of growth began. Savills' Total Commercial Development Activity Index shows a 3.1% growth in UK commercial real estate activity in the year ending January 2013, down from 10.6% in December. That said, a seasonal drop between December and January, so the main thing is that growth continued.

The report goes on to contain predictions from commercial developers who foresee a solid year ahead for UK commercial property. Moreover, the degree of confidence as indicated by a net balance of +9.2% was the strongest registered since April 2010.  Monitored companies stated that the launch of new projects is anticipated to result in higher activity over the next three months.

Whereas commercial development rose in the private sector, a decrease was signalled for public sector work. Both retail and leisure public sector property investment fell sharply and slightly respectively.

UK commercial property picked itself up much more quickly than its residential counterpart and during 2010 when the residential false dawn commercial investment was also soaring with London becoming one of the hottest cities in the world for both commercial and residential.

Now the roles have been somewhat reversed when it comes to London as the residential sector is now at the top of the global pyramid whereas commercial has cooled significantly in the capital. Of course commercial property in the rest of the country caught the flu from a London cold. Savills index has shown strong growth over the last 5 months indicating a recovery that is this time free from government stimulus, so perhaps we should take a little context with our seasonal slowdowns.

- Thursday 14 February 2013

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