Demand from businesses for commercial property in the UK has increased in the third quarter. Both rental and capital value projections that had dipped in the previous quarter amid the Brexit vote are back in the positive territory, according to the Royal Institution of Chartered Surveyors (Rics).
However, while expectations had improved across most parts of the country, London and Scotland were lagging behind.
The London-based professional body that accredits professionals within the land, property and construction sectors, said while these projections had improved, it was still significantly lower when compared to the start of 2016.
Rics said Scotland had seen the sharpest decline in demand. It said 24% more chartered surveyors had witnessed a fall in the region during the third quarter. In London, Rics said the fall in demand marked the second consecutive quarter of declines. It added that the UK capital had seen a significant dip in office space with 22% more respondents reporting the same.
The Q3 2016 Rics UK commercial property market survey showed that occupier demand rose 12% at an all-sector level, up from zero in the second quarter. This was, however, still lower than pre-referendum levels. Sector-wise classification, however, revealed this was driven by the industrial sector, with 27% more respondents reporting a surge in demand for industrial properties across the UK. Demand across retail and office sectors, however, remained flat.
With regards to rent, Rics said expectations had improved to a net balance of +13% in the third quarter. This it said was better than the reading of -7% in the previous quarter.
On the investment side, the survey report showed that 9% more respondents saw a rise in demand. This was up from -16% in the second quarter. Even in this context, the industrial sector was the strongest performer. The survey highlighted that the demand from foreign investors had increased, especially in London, amid the fall in the value of the pound.
"Foreign purchasers look to be capitalising on the opportunity to buy prime assets across the capital given the significant discount provided by the weak pound, along with price reductions seen in July and August," Rics said.
On being asked whether members had seen any evidence of businesses looking to relocate away from the UK amid the Brexit vote, 86% of them responded in the negative. The remaining 14% said they had seen firms looking to relocate.
Rics is a London-headquartered professional body that accredits professionals within the land, property and construction sectors. Apart from the UK, it has offices across mainland Europe, in China, Hong Kong, Singapore, Australia, the Middle East and other countries.