'Increasing appetite for commercial sector' report reveals
Investors are beginning to show an interest in the commercial real estate market again after total property returns moved into positive territory for the first time in two years during July.
According to accountancy giants BDO Stoy Hayward, returns rose from -0.2 per cent in June to +0.6 per cent in July, while the number of commercial property transactions also continued at a steady pace of 8,000 transactions in June and July.
Despite demand remaining weak, commentators believe these latest figures could show a bottoming out in the sector, as increased interest in acquisitions lead to an improvement in prime yields and activity levels.
Solly Benaim, head of real estate and construction at BDO Stoy Hayward, said: ‘Although we are seeing firming yields and an increasing appetite from investors to acquire properties, it is premature to assume that the market has fully bottomed out. However, these signs of life are welcome news considering the market has been in a downward spiral since the end of last year.’
Nicholas Thompson, chief executive officer of architects firm AukettFitzroyRobinson: ‘We have seen a marked increase in the number of new enquiries in both July and August in comparison to the previous ten months.
‘In terms of forecasting a recovery, we would anticipate that this is at least six months away. Our definition of recovery is when we are receiving actual major instructions, in any volume.
‘For the immediate future, the real issue for architects is maintaining critical mass at a time of a change in market sentiment.’
The optimistic BDO Stoy Hayward figures are contradicted by new statistics released by construction industry tracker Glenigan. According to the database’s latest monthly round-up, the value of the top ten commercial contracts on architects’ books fell from more than £4,219,000,000 in July to £2,108,240,000 in August.