By Marcus Leach
Colliers International’s London property snapshot for April 2011 has revealed that the lack of space, particularly in central London, is continuing to impact on all sectors of the property market.
The key findings were:
- Imported inflation is undermining the benefits of improving economic growth. Disposable income is falling in real terms and is likely to undermine economic recovery and the pace of government fiscal retrenchment.
- Prime assets are in short supply with strong competition pushing yields lower. Transactions are few, with limited new stock coming to market. The hope remains that banks will begin to release more stock, although debt availability appears to be tightening.
- The retail sector continues to struggle with tenants and landlords under pressure from weak trading conditions. Central London continues to outperform.
- London’s Grade A leasing market, especially the West End, is running out of space, the City less so. Regional occupiers remain reluctant to commit to new leases.
- Sector economics remain positive, although a lack of operating capital and weakening confidence in retail distribution is inhibiting expansion.
- House prices are showing signs of stability, although remain very sensitive to interest rates. Despite market uncertainty, house builders are busy acquiring sites.