Political uncertainty dampening commercial market
POLITICAL and economic uncertainty is dampening conditions in the commercial property market in Wales, according to the latest RICS (Royal Institution of Chartered Surveyors) Commercial Market Survey.
Overall occupier demand growth eased back in the second quarter of the year, whilst growth in investor demand for office and retail properties moderated.
Three-month rent expectations were also scaled back for these two market sectors.
However, conditions in the industrial sector fared better than for office and retail.
Rent expectations for industrial space strengthened, and investment enquiries came in at an increased rate.
Capital value expectations in the industrial sector also remained firmly in positive territory.
This is a similar trend to the UK market, where the industrial sector fared better than retail.
A greater shift towards online shopping is supporting the demand in the industrial segment, with respondents noting a squeeze in the supply for leasable space in this area.
Significantly, the amount of available retail space in Wales rose in Q2, whilst supply of industrial space was reported to have fallen.
Overall, whilst sentiment in the Welsh commercial property sector was not quite as positive as previously, it remains stronger than in other UK regions.
Political uncertainty – including the recent General Election and the Brexit negotiations - is cited as a factor weighing on occupier and investor decisions.
Chris Sutton, RICS commercial property spokesperson in Wales, said: “The commercial property market in Wales remains very much split between what is happening in Cardiff and what is happening elsewhere.
“Cardiff remains the driver of economic growth in Wales and new investment and development activity is helping transform the city centre.
“The challenge is now to encourage activity across other parts of Wales and increased investment in infrastructure will assist in delivering this.
“The recent announcement by the UK Government that tolls on the Severn Bridges will be abolished in December 2018 should have a transformative effect on the logistics sector in South Wales but will require a strategic approach to planning to allocate land for this purpose.”