Demand for retail property in London is approaching lows last seen after the 2008 financial crash, according to new research.
The latest UK Commercial Property Market Survey results published today by the Royal Institute of Chartered Surveyors (RICS) showed that demand for retail property in London fell for the second quarter of the year.
In an indication of the ongoing malaise in the sector, retail was found to be responsible for pulling the overall figure in terms of demand for property down below zero, with a net balance of -61.
The retail property sector also posted the highest rise in terms of availabilities, with 52% of respondents reporting a “significant rise in availability”.
The survey also found demand from overseas investors continued to drop during the quarter as Brexit loomed, with respondents reporting -9% growth. This represented the third quarter in a row where overseas investor demand fell.
However, the RICS report found a rise in demand for industrial buildings – in particular warehouses for ecommerce.
Rents on prime and secondary retail sites are predicted to fall 3.5% and 7% respectively over the next 12 months.
RICS economist Tarrant Parsons said: “The overall picture remains little changed across the UK commercial property market in Q2, with the disparity between a strong backdrop for the industrial sector and weakness in retail still very evident. While expectations continue to point to solid rental and capital value growth in the former, further declines are expected in the latter.
“Brexit uncertainty also remains a notable headwind, causing caution across both occupiers and investors while they await clarity on the UK’s future trading relationship with the EU.”
By Hugh Radojev
Source: Retail Week