Election jitters
The looming General Election has unsettled the UK commercial property market, says the latest research from Cushman & Wakefield.
David Hutchings, head of research, said: “The market remains strong but it is clear that some investors are at the very least getting more pre-occupied with a range of other issues and this has led to a slight pull-back in enthusiasm over the past month.”
“The primary investor concern is probably now the approaching election but not perhaps just because of uncertainty as to who may be in power but more due to the fact that necessary decisions are being delayed. The sooner we know where the spending axe will fall and what taxes will rise, the sooner occupiers and investors can plan accordingly and get on with securing the recovery for their businesses.”
Cushman & Wakefield, which notes that the really hot money is still focused on the West End and City of London, says yields for prime property edged down a further 5bp in March to an average of 5.85%, their lowest since May 2008. Yields have now fallen 153bp since the market low-point one year ago but are still up 142bp since the market peaked in 2007, the group notes.
While margins are coming under pressure amid increasing competition to lend, which is leading some lenders to consider riskier propositions, many borrowers are still struggling to compete with equity buyers and the group says it is clear that many vendors still prefer to deal with equity rather than debt buyers, “to ensure a speedy and certain trade”.
