| Commercial property on the slow road to recovery
The outlook for commercial property is the focus this week with new research from Colliers International suggesting that the UK market is slowly recovering from the effects of the pandemic. Around GBP2 billion was transacted for the second month running in July, a significant increase on the weak figures recorded during lockdown, but still down around 60 per cent down on the GBP5.6 billion recorded in July last year.
Oliver Kolodseike, Deputy UK Chief Economist at Colliers International, says: “Investment volumes in the first seven months are down by 20 per cent on 2019 levels. This is not a bad result, and certainly better than many were expecting at the start of downturn."
New research from Savills meanwhile, says that European office vacancy rates increased by an average of 30bps to 5.8 per cent during Q2 2020, but remain at an historically low level. And a lack of supply in general across the continent, but most noticeably in Berlin, Paris and Munich, means headline rents are actually on the increase.
“The undersupply of office space across Europe has continued to apply upward pressure to prime headline rents which have grown by an average of 3 per cent over the 12 months to Q2 2020, despite rent free periods increasing by 1 per cent," says Mike Barnes, Associate European research at Savills.
The Edinburgh office market too, is well placed to recover from the economic downturn, according to analysis from Knight Frank, which reveals that the vacancy rate for all grades of office space across the city is unlikely to exceed 8.5 per cent, less than half the rate registered in the aftermath of the financial crisis just over a decade ago.
"The volume of demand has remained robust, while the supply of new space remains relatively scarce and the development pipeline has been stunted by the effects of Covid-19," says Toby Withall, office agency partner at Knight Frank Edinburgh.
Central London's prime residential market meanwhile is seeing an uptick in interest from buyers from Hong Kong, the United Arab Emirates and India, according to DEXTERS. And as well as a prestigious postcode – Mayfair, Marylebone, Knightsbridge, Kensington, Chelsea – private entrances plus outside space are top of prospective purchasers' wish-lists.
Real estate investment in Europe in general, not just the UK capital, is a priority for Hong Kong HNWIs, according to a new survey from Invest Cyprus, which perhaps predictably identifies recent political tensions with mainland China as a major factor in Hong Kong investors looking to move capital to the continent.
And finally, a bit of tech news with a new partnership between British Land and Equiem which is aiming to deliver a 'digital tenant engagement app' across the company's mixed-use London campuses. Broadgate's 19 million annual visitors will be the first to sample the Equiem experience with the new app providing curated content on shops and restaurants as well handsfree access to office and amenities and info on air quality and building occupancy levels.
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