United Kingdom Real Estate Industry Update Quarter 3 2012

  • August 2014
  • -
  • Business Monitor International
  • -
  • 68 pages

Includes 3 FREE quarterly updates

The United Kingdom Real Estate report examines the Commercial Office, Retail, Industrial and Construction sectors . With a focus on the principal cities of London, Manchester and Glasgow, the report covers the rental industry performance in terms of rates and yields over the past 18 months and examines how best to maximise returns in the commercial real estate industry, while minimising investment risk and exploring the impact of a variety of factors weighing heavily on the UK’s real estate industry .
The commercial segment is under pressure as a result of the country’s economic woes, though it has remained more stable than might be expected. Activity in commercial property has been very slow as businesses and landlords watch and wait for signs of economic recovery.
The office space sub-sector is a stable element of the sector, with office space in central London experiencing a healthy run of growth. This now looks to be slowing, but we expect growth to remain positive, as the capital has limited scope for new development and demand has moved faster than new supply. New retail developments (larger shopping malls) and fierce competition for high-end retail space in central London are the key growth areas, with other retail spaces as well as industrial and office spaces showing slower growth rates in the face of broader economic weakness in the UK.
High-end retail in the London industry is the clear outperformer in the UK real estate segment, as a constant flow of foreign shoppers and tourists support this sector despite weak macroeconomic fundamentals.
Outside central London, large shopping centres continue to open across the UK, creating new supply and attracting tenants and footfall, although ‘high street’ retail will suffer as a result. The office and industrial sectors, however, will remain under pressure, despite some high-profile deal making, as a result of weak economic growth, tight credit and job losses in the private and public segments undercutting demand for new business rental space.

Key Points
- Going by the official data published by the Office for National Statistics, the UK economy is back in recession. However, we believe this prognosis could prove premature, with the economy potentially skirting a soft patch rather than returning to negative growth.
- Construction output is estimated to have fallen by 3.0% quarter-on-quarter from -0.2% in Q411 - The UK has become an unlikely safe haven amid the turmoil in the eurozone with its deep and liquid capital industry s providing refuge for capital fleeing the currency union.

Table Of Contents

Executive Summary . 5
Industry SWOT Analysis . 6
UK Real Estate/Construction Industry Environment and Risk Analysis 6
UK Political Environment and Risk Analysis 7
UK Economic Environment and Risk Analysis . 8
UK Business Environment SWOT .. 8
Real Estate Industry Overview .. 9
Market Analysis - Office 11
Rents And Yields .. 11
Data : Historic Rents, from 2010 to 2011 (EUR per m2/month) ... 11
Data : Net Yield, from 2011 to 2012 (%) . 11
Data : Terms of Rental Contract/ Leases - Mid 2011 .. 11
Supply And Demand. 12

Market Projection Scenario ... 13
Data : Projection Rents, (EUR per m2/month) 13
Data : Projection Net Yield, from 2008 to 2016 (%) .. 13
Market Analysis - Retail 14
Rents And Yields .. 14
Data : Historic Rents, from 2010 to 2011 (EUR per m2/month) ... 14
Data : Net Yield, from 2011 to 2012 (%) . 14
Data : Terms of Rental Contract/ Leases - Mid 2011 .. 14
Supply And Demand. 15

Market Projection Scenario ... 16
Data : Projection Rents, (EUR per m2/month) 16
Data : Projection Net Yield, from 2008 to 2016 (%) .. 16
Market Analysis - Industrial .. 17
Rents And Yields .. 17
Data : Historic Rents - from 2010 to 2011 (EUR per m2/month) . 17
Data : Net Yield, from 2011 to 2012 (%) . 17
Data : Terms of Rental Contract/ Leases - Mid 2011 .. 17
Supply And Demand. 18

Market Projection Scenario ... 19
Data : Projection Rents - (EUR per m2/month).. 19
Data : Projection Net Yield, from 2008 to 2016 (%) .. 19
Forecast Scenarios 20
Infrastructure Report 20
Data : UK Construction And Infrastructure Market Data, from 2007 to 2016 ... 20
Data : UK Construction And Infrastructure Market Data, from 2012 to 2021 ... 21
Construction And Infrastructure Projection Scenario 23
Special Events: Olympic Games .. 26

Macroeconomic Data ... 28
Data : United Kingdom - Economic Activity 30
Real Estate Risk/Reward Ratings . 31
Real Estate/Construction Risk/Reward Ratings 31
Data : Real Estate/Construction Risk/Reward Ratings 31
UK’s Business Environment .. 31
Data : BMI Business And Operation Risk Ratings ... 32
Institutions ... 32
Data : BMI Legal Framework Rating .. 33
Infrastructure ... 34
Data : Labour Force Quality ... 37
Market Orientation .. 37
Data : Trade And Investment Ratings .. 38
Data : Top Export destinations 39
Operational Risk .. 40

Competition Overview . 41
Company Profiles ... 46
AandJ Mucklow Group ... 46
British Land . 47
Hammerson .. 49
Land Securities 50
SEGRO 52
Demographic Data .. 54
Data : The United Kingdom's Population By Age Group, 1990-2020 ('000) ... 55
Data : The United Kingdom's Population By Age Group, 1990-2020 (% of total) .. 56
Data : The United Kingdom's Key Population Ratios, 1990-2020 ... 57
Data : The United Kingdom's Rural And Urban Population, 1990-2020 57
BMI Methodology ... 58
How We Generate Our Market Projections .. 58
Construction Market .. 59
Bank Lending ... 60
Sources 60

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