Will the Spending Review bring some clarity?
As the commercial property industry absorbs the detail of today’s Spending Review, we’re looking at the Commercial Development Activity Index from Savills, which shows that commercial development activity levels in September fell at the sharpest rate for 18 months.
Savills says both public and private-sector activity reduced during the month, with a particularly sharp drop in public-sector activity, where the pace of decline was the steepest since December 2008. The drop in private-sector activity was more moderate.
About 28% of commercial developers recorded a fall in overall activity during September, compared with 14% that indicated a rise. As a result, Savills’ Total Commercial Development Activity Index came in at minus 13.8% in September, down from minus 13.3% in August.
While developers remained pessimistic about the prospects for the next three months, the degree of negative sentiment had eased a little from August’s 18-month low. Lack of credit availability and concerns about public spending were again the main causes for pessimism. Developers were most gloomy about future opportunities for office development during the next quarter.
Savills said when its index was published last week that it hoped today’s Spending Review would bring “the clarity that allows property developers to make informed decisions about project viability”. Look out for plenty of comment in the next few days across all media as the details of the review are examined and conclusions drawn.
